5 Stocks to Buy as U.S. Consumer Spending Continues to Rise
U.S. consumer spending rose again in April as checks from the second round of stimulus helped millions of Americans to spend more freely. This at the same time shows that people are a lot more confident about economic recovery and are driving it by spending more.
Interestingly, this rise in spending comes despite a decline in personal income. More people are now getting back their jobs as the economy continues to reopen and jobless claims have fallen for four consecutive weeks.
Consumer Spending Increases
Consumer spending rose 0.5% in April, after jumping a solid 4.7% in March, according to the Commerce Department. Although April’s rise looks moderate compared to March, the good sign is that people are now more confident about spending as restrictions continue to ease. Consumer spending accounts for almost two-thirds of total U.S. activity and the figure indicates that people are showing more faith in the economy.
Consumer spending had declined in February. However, as the stimulus checks started reaching people, people started spending with more ease. Interestingly, the rise in spending comes despite the 13.1% decline in personal income.
However, that hasn’t stopped people from spending, which is the driver of the economy.
Economy Making Solid Progress
The rise in April was led by a 1.1% increase in spending on services, which includes airline travel, restaurants and hotels, and travel and leisure, sectors that took a bad hit last year due to the pandemic.
As the economy reopened and restrictions further got eased, people spent more on eating out and travel. In fact, in April people spent more on services than on goods. Consumer spending on services got a boost of $112.6 billion that helped offset a decline of $32.3 billion in spending on goods.
Consumers have been spending more this year given that the vaccination drive has given them more confidence. Restrictions on usage of masks and travel have been eased. These along with the stimulus checks and job openings have boosted consumer spending.
Weekly jobless claims too have been steadily declining. Jobless claims fell 38,000 to 406,000 for the week ended May 22, according to the U.S. Labor Department. This is the fourth straight week of decline in initial jobless claims.
Given this situation, consumer discretionary stocks seem to be an ideal sector to invest in. The Consumer Discretionary Select Sector SPDR (XLY) has returned 39.7% in the past year.
Our Choices
We have picked five stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) that are poised to benefit in the near term. You can see the complete list of today’s Zacks #1 Rank stocks here.
Lifetime Brands, Inc. LCUT is a leading designer, marketer and distributor of kitchenware, cutlery & cutting boards, bakeware & cookware, pantryware& spices, tabletop and bath accessories.
The company’s expected earnings growth rate for the current year is 37.9%. The Zacks Consensus Estimate for current-year earnings has improved 24.8% over the past 60 days. The company carries a Zacks Rank #1.
Funko, Inc. FNKO is a pop culture consumer products company. It offers figures, plush, apparel, toys, vinyl, bags, wallets, homewares and accessories under the Mystery Minis, Dorbz, Pint Size Heroes, Rock Candy, Galactic or Hero Plushies, SuperCute, MyMoji and Loungefly brands.
The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 19.8% over the past 60 days. Funko has a Zacks Rank #2.
Alto Ingredients, Inc. ALTO is a producer of specialty alcohol and essential ingredients. The company is focused on products that include Health, Home & Beauty; Food & Beverage; Essential Ingredients and Renewable Fuels.
The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the past 60 days. Alto Ingredients has a Zacks Rank #2.
OneWater Marine Inc. ONEW is a premium recreational boat retailer functioning principally in the United States. It offers products and services, which include the sale of new and pre-owned boats, parts and accessories, finance and insurance products, maintenance and repair services, and ancillary services.
The company’s expected earnings growth rate for the current year is 54.9%. The Zacks Consensus Estimate for current-year earnings has improved 31.1% over the past 60 days. OneWater Marines ports a Zacks Rank #1.
Brunswick Corporation BC endeavors to instill Genuine Ingenuity in all its leading consumer brands, including Mercury and Mariner outboard engines; Mercury MerCruiser sterndrives and inboard engines; MotorGuide trolling motors; and Attwood and Whale marine parts and accessories.
The company’s expected earnings growth rate for the current year is 45.4%. The Zacks Consensus Estimate for current-year earnings has improved 15.7% over the past 60 days. Brunswick Corporationcarries a Zacks Rank #2.
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Brunswick Corporation (BC) : Free Stock Analysis Report
Funko, Inc. (FNKO) : Free Stock Analysis Report
Lifetime Brands, Inc. (LCUT) : Free Stock Analysis Report
OneWater Marine Inc. (ONEW) : Free Stock Analysis Report
Alto Ingredients, Inc. (ALTO) : Free Stock Analysis Report
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