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Consumer Confidence Hits One-Year High: 5 Solid Stocks to Buy

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U.S. consumer sentiment continues to rise in March, reaching its highest level in a year, per the University of Michigan's confidence index. Consumer confidence has improved as more people are getting vaccinated and business prospects have grown with many states easing restrictions.

Moreover, the new round of stimulus has given consumers’ confidence a boost to spend more freely. At the same time, it shows the growing faith in the country’s economy.

Consumer Confidence Rises in March

U.S. consumer confidence rose to 84.9 in March from a reading of 76.8 in February, according to the University of Michigan's closely followed consumer confidence index. Economists had projected a rise of 83.5. This is the highest level in a year.

Also, views on the current economic condition and their expectations improved. The gauge of the current economic situation jumped from 86.2 to 93 in March. The view on expectations jumped 9 points to 79.7 in March. Also, expectations for inflation over the longer term rose to a nearly six-year high.

Moreover, a measure of the economic outlook over the next 12 months increased 25 points to a one-year high of 108 in March. Also, respondents of the survey expect prices to rise in the coming days but be lower than the February expectations. Consumers expect prices to increase 3.1% over the next year compared with 3.3% in February.

Stimulus, Vaccination Boost Confidence

One of the major reasons behind the jump in consumer confidence in March was the massive vaccination drive. Millions of Americans have been getting vaccinated over the past couple of months and the pace is fast picking up. This has given rise to hopes of a faster economic recovery.

Moreover, as new cases continue to decline, many states have been easing restrictions. This has improved business conditions and added to the consumer confidence level.  Also, the $1.9 trillion coronavirus relief package has now started reaching people, which is giving them the confidence to spend at ease.

Although the United States is witnessing its worst decline in the second quarter since 1947, the economy rebounded in the third quarter and finished the fourth quarter up 4%. People had expected a worse performance but moderate gains in the fourth quarter have once again proven that people have not lost confidence in the economy’s strength.

With the rise in consumer confidence, discretionary stocks seem to be an ideal space to invest in. The consumer discretionary sector has also been one of the biggest beneficiaries of this pandemic. The Consumer Discretionary Select Sector SPDR’s (XLY) has returned 63.7% in the past year or since the outbreak.

Our Choices

Consumer confidence has hit a one-year high, testifying people’s faith in the nation’s economy despite coronavirus. It would thus be ideal to invest in consumer discretionary stocks right now. We have picked four 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.

Prestige Consumer Healthcare Inc. PBH and its subsidiaries develop, manufacture, market, sell and distribute over-the-counter healthcare and household cleaning products in the United States, Canada, Australia and certain other international markets.

The company’s expected earnings growth rate for the current year is 9.5%. The Zacks Consensus Estimate for current-year earnings has improved 1.9% over the past 60 days. Prestige Consumer Healthcare has a Zacks Rank #2.

Central Garden Pet Company CENT is looking forward to strengthening its position as one of the leading companies in U.S. pet supplies, and lawn and garden supply spaces. Unique packaging, point-of-sale displays, logistic capabilities and a high level of customer service are some of its key growth catalysts.

The company’s expected earnings growth rate for next year is 2.2%. The Zacks Consensus Estimate for current-year earnings has improved 11.6% over the past 60 days. Central Garden Pet Company has a Zacks Rank #2.

Spectrum Brands Holdings Inc. SPB offers a portfolio of leading brands in several product categories like residential locksets, plumbing, electric shaving and grooming products, personal care products, small household appliances, specialty pet supplies, and lawn, garden and home pest control products and repellents.

The company’s expected earnings growth rate for the current year is 32.2%. The Zacks Consensus Estimate for current-year earnings has improved 7.5% over the past 60 days. Spectrum Brands has a Zacks Rank #2.

Mastercraft Boat Holdings, Inc. MCFT designs, manufactures and markets recreational powerboats through its subsidiaries. The company's operating segment consists of MasterCraft and NauticStar.

The company’s expected earnings growth rate for the current year is 97.8%. The Zacks Consensus Estimate for current-year earnings has improved 6.9% over the past 60 days. Mastercraft Boat sports a Zacks Rank #1.

Malibu Boats, Inc. MBUU operates as a designer, manufacturer and marketer of sport boats primarily in the United States. The company sells its boats under two brands: Malibu and Axis Wake Research.  

The company’s expected earnings growth rate for the current year is 73.3%. The Zacks Consensus Estimate for current-year earnings has improved 13.8% over the past 60 days. Malibu Boats carries a Zacks Rank #2.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>


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Central Garden & Pet Company (CENT) : Free Stock Analysis Report
 
Spectrum Brands Holdings Inc. (SPB) : Free Stock Analysis Report
 
Prestige Consumer Healthcare Inc. (PBH) : Free Stock Analysis Report
 
Malibu Boats, Inc. (MBUU) : Free Stock Analysis Report
 
MASTERCRAFT BOAT HOLDINGS, INC. (MCFT) : Free Stock Analysis Report
 
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