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4 Consumer Discretionary Gainers From Positive Vaccine News

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Zacks Equity Research
·5 min read
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Rising optimism with regards to COVID-19 vaccine bodes well for the U.S. economy and in turn for discretionary stocks which were battered by lockdowns earlier this year. With businesses and stores being shut and people staying at home to maintain social distancing norms, stocks that are sensitive to the functioning of the economy had to bear the brunt. However, despite the challenges, consumer discretionary stocks have managed to gain in double digits in the year.

Notably, the Consumer Discretionary Select Sector SPDR (XLY) has gained 25.9% year to date. Promising news on the vaccine front is sure to add more fuel to it going forward as people are expected to spend more post such encouraging developments.

The last few weeks have seen a flow of positive news on the vaccine front with Moderna, Inc. MRNA announcing in a press release that its vaccine candidate showed an efficacy of 94.5%. AstraZeneca PLC AZN also announced in a press release that its vaccine candidate showed an average efficacy of 70%. In fact, Pfizer, Inc. PFE and BioNtech SE BNTX are seeking Emergency Use Authorization from the FDA for their vaccine candidate which was found to be 95% effective, as reported in a press release. Proper distribution and usage of the vaccine will mean that people will finally be able to go out unhindered and resume activities and spending.

In any case, consumer spending in the United States has recently seen an uptick. Per the latest release by the Bureau of Economic Analysis, personal consumption expenditure increased 0.5% in October. The report further mentioned that spending for goods was led by recreational goods and vehicles. Although the growth moderated from the revised gain of 1.2% in September, consumer spending has been rising steadily over the past few months. It also increased 1.5% and 1.2%, respectively, in the months of July and August. This indicates that despite the challenges, consumers are willing to increase their outlays and a vaccine will only improve that further.

Reflective of this sustained increase in consumer spending, durable goods orders have also seen a pick up in the past few months. Notably, the Commerce Department reported that new orders for durable goods expanded 1.3% in October following a revised increase of 2.1% in September, as quoted in a BloombergQuint article.

4 Top Stocks to Buy

Encouraging developments with regards to the coronavirus vaccine and steady rise in consumer spending bodes well for discretionary stocks. With a complete resumption in activities, people will be enthused to resort more to discretionary spending and activities that were hampered by the pandemic. Hence, it will be a judicious time now to invest in stocks which stand to benefit from this trend. We have picked four such stocks that carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Acushnet Holdings Corp. GOLF designs, develops, manufactures and distributes golf products in the United States. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings increased 61.8% over the past 60 days. The company’s expected earnings growth rate for next year is 48.2%.

YETI Holdings, Inc. YETI designs, markets, retails and distributes products for the outdoor and recreation market in the United States under the YETI brand. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings increased 21.7% over the past 60 days. The company’s expected earnings growth rate for the current year is 45%.

Malibu Boats, Inc. MBUU designs, manufactures, distributes, markets and sells a range of recreational powerboats in the United States. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings increased 10.3% over the past 60 days. The company’s expected earnings growth rate for the current year is 46.8%.

MasterCraft Boat Holdings, Inc. MCFT, through its subsidiaries, designs, manufactures and markets recreational powerboats in the United States. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings increased 26.5% over the past 60 days. The company’s expected earnings growth rate for the current year is 85.1%.

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AstraZeneca PLC (AZN) : Free Stock Analysis Report
 
Pfizer Inc. (PFE) : Free Stock Analysis Report
 
Moderna, Inc. (MRNA) : Free Stock Analysis Report
 
Acushnet Holdings Corp. (GOLF) : Free Stock Analysis Report
 
Malibu Boats, Inc. (MBUU) : Free Stock Analysis Report
 
MASTERCRAFT BOAT HOLDINGS, INC. (MCFT) : Free Stock Analysis Report
 
YETI Holdings, Inc. (YETI) : Free Stock Analysis Report
 
BioNTech SE Sponsored ADR (BNTX) : Free Stock Analysis Report
 
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