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Consumer Confidence Soars to Pandemic-Era High: 5 Picks

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The Delta variant of coronavirus has been a cause of concern lately and fears have been escalating once again. Even then, people are confident as vaccination is in full swing. While it was being feared that rising cases of coronavirus could dent the confidence of people, that doesn’t seem to be the case, with consumer confidence hitting a pandemic-era high in July.

This was in sharp contrast to the consensus estimate of a one-point decline in July. The jump in consumer confidence once again proves that the economy is on track for a speedy recovery.

Consumer Confidence Rises

The Conference Boardsaid on Jul 27 that consumer confidence increased to 129.1 in July from 128.9 in June. Although it is only a 0.2% rise, consumer confidence hit its highest level since February 2020, just the time when COVID-19 started spreading.

Moreover, consumer confidence has now increased for the sixth straight month, which again coincides with the time the vaccination drive gathered steam.

The measure of consumer sentiment surrounding the current situation, which is based on consumers' gauge of current business and labor market conditions, reached 160.3 in July from 159.6 last month. However, the measure of expectations or the Expectations Index, which calculates consumers’ short-term outlook for income, business and labor market conditions, declined slightly to 108.4 from 108.5 in June.

Stimulus, Higher Vaccinated Rate Drive Confidence

Consumers are more confident after taking the vaccine and receiving the fiscal stimulus. The rising cases of the Delta variant of coronavirus have not played a spoilsport yet. In fact, people are spending more now, which led to a jump in retail sales last month.

The massive vaccination drive also raised hopes of a faster-than-expected economic recovery. With restrictions eased, people are stepping out of their homes more freely and planning holidays.

Moreover, Tuesday’s report also mentions that according to IMF, economic growth in different countries will depend to a great extent on how the COVID-19 vaccines are rolled out. The economic outlook is improving for most of the advanced economies, given that almost 40% of the population in these countries is now vaccinated.

Given this situation, consumer discretionary stocks seem to be an ideal sector to invest in. The Consumer Discretionary Select Sector SPDR’s (XLY) has returned 13.7%year to date.

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.

Party City Holdco Inc. PRTY is involved in the design, manufacture and contracts for manufacturing and distribution of party goods, including paper and plastic tableware, metallic and latex balloons, Halloween and other costumes, accessories, novelties, gifts and stationery.

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 55% over the past 60 days. Party City has a Zacks Rank #2.

RCI Hospitality Holdings, Inc. RICK owns and operates adult nightclubs that offer live adult entertainment, restaurant and bar services.

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 0.7% over the past 60 days. RCI Hospitality Holdings has a Zacks Rank #1.

Camping World Holdings Inc. CWH is a provider of services, protection plans, products, and resources for recreational vehicle enthusiasts. It offers new and used RVs for sale, vehicle service and maintenance through retail locations and membership clubs.

The company’s expected earnings growth rate for the current year is 54.1%. The Zacks Consensus Estimate for current-year earnings has improved 6.8% over the past 60 days. Camping World Holdings has a Zacks Rank #1.

Travel Leisure Co. TNL offers vacation experiences and travel inspiration to owners, members, and subscribers every year through its products and services.

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 0.6% over the past 60 days. Travel Leisure Co. has a Zacks Rank #1.

Pool Corporation POOL is the world's largest wholesale distributor of swimming pool supplies, equipment and related products. In addition, the company is a leading regional wholesale distributor of irrigation and landscape products. 

The company’s expected earnings growth rate for the current year is 59.9%. The Zacks Consensus Estimate for current-year earnings has improved 9.6% over the past 60 days. Pool Corporation has a Zacks Rank #1.


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