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Consumer Confidence Soars to One-Year High in March: 5 Picks

·5 min read

U.S. consumer confidence breezed past expectations in March, according to a report released by the Conference Board on Mar 30. Consumer confidence got a boost on hopes of a faster economic and labor market recovery.

Moreover, the rapid pace of vaccination and a new round of stimulus have given consumers’ confidence a renewed boost. The new round of stimulus has also given people the confidence to spend more freely.

Consumer Confidence Hits a High

The Conference Board said on Mar 30 that the consumer confidence index soared to a reading of 109.7 in March from 90.4 in February. This is also the highest level since the coronavirus outbreak in March 2020. Economists had expected the index to jump to a reading of 96.9.

However, consumer confidence remains far below its reading of 132.6 in February 2020. The gain in March was also the sharpest monthly gain in almost 18 years. The gauge of consumer sentiment surrounding the current situation climbed to a one-year high of 110. The measure of expectations increased to 109.6, the highest level since July 2019.

Among those who were surveyed, a record number of respondents said that they plan to buy a home in the near term. Also, numbers rose of those who plan to purchase cars and major appliances. Moreover, 36.1% of the respondents are expecting greater job opportunities over the next six months.

Confidence Grows as More People Get Vaccinated

Despite the pandemic playing havoc, consumers have lately been hopeful about a faster economic and labor market recovery. The massive vaccination drive has raised hopes among people that things will return to normal sooner than expected. Millions of Americans have received vaccines over the past couple of months and the pace is fast picking up.

As new cases continue to fall, many states have too are easing restrictions, thus boosting the job market. Also, the new round of stimulus has given people the confidence to spend more freely. This has significantly improved consumers’ assessment of the current conditions and the short-term outlook.

With the rise in consumer confidence, discretionary stocks seem to be an ideal sector 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 68.4% in the past year or since the outbreak.

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.

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.

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 carries a Zacks Rank #2.

Prestige Consumer Healthcare Inc. PBH and its subsidiaries develop, manufacture, market, sell and distribute over-the-counter healthcare and household cleaning products in 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.

Vista Outdoor Inc. VSTO develops, manufactures and distributes optics, accessories and eyewear. Its product consist of binoculars, laser rangefinders, riflescopes, trail cameras, archery accessories, blinds, decoys, game calls, gun care products, mounts, powder, reloading equipment, targets, target systems, safety and protective eyewear, fashion and sports eyewear.

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 19.3% over the past 60 days. Vista Outdoor has a Zacks Rank #2.

Smith & Wesson Brands, Inc. SWBI designs, manufactures and sells firearms. The company offers pistols, revolvers, rifles, handcuffs and other related products and accessories under the Smith & Wesson, M&P, Performance Center, Thompson/Center Arms and Gemtech 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 22.3% over the past 60 days. Smith & Wesson Brands has a Zacks Rank #2.

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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
 
Vista Outdoor Inc. (VSTO) : Free Stock Analysis Report
 
Smith & Wesson Brands, Inc. (SWBI) : Free Stock Analysis Report
 
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