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Consumer Confidence Soars to 14-Month High: 5 Solid Picks

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U.S. consumer confidence soared for the second month in a row in April beating analysts’ expectations, according to a report released by the Conference Board on Apr 27. The jump in April suggests that economic recovery strengthened further inthe beginning of the second quarter and is likely to improve further.

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

Consumer Confidence Continues to Soar

The Conference Board said on Apr 27 that the consumer confidence index jumped to a reading of 121.7 in April from 109in March. This is also the highest level since February 2020, the time when the pandemic struck the United States.

The gauge of consumer sentiment surrounding the current situation, which is based on consumers' assessment of current business and labor market conditions climbed to 139.6 in April from a reading of 110.1 in March.The measure of expectations increased to 109.8 from 108.3 in March.

Among those surveyed, 23.3% now believe that business conditions are “good” compared to 18.3% in March. Those who believe that business conditions are "bad" declined from 30.1%to 24.8%.Moreover, 37.9% of the respondents are expecting greater job opportunities over the next six months.

Stimulus, Higher Vaccinated Rate Drive Confidence

The vaccination rate is fast increasing, bringing back the much-required confidence among people in a faster economic and labor market recovery. The massive vaccination drive has raised hopes of a faster-than-expected economic recovery.

As new cases continue to fall, many states have started 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. 

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 59.1% 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.

Central Garden Pet Company (CENT - Free Report) 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 the current year is 7.5%. The Zacks Consensus Estimate for current-year earnings has improved 15.7% over the past 60 days. Central Garden Pet Companysports a Zacks Rank #1.

Funko, Inc. (FNKO - Free Report) is a pop culture consumer products company. It offers figures, plush, apparel, toys, vinyl, bags, wallets, homewares and accessories under 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 63.2% over the past 60 days. Funko has a Zacks Rank #2.

Clarus Corporation (CLAR - Free Report) engages in design, manufacture and marketing of outdoor equipment and apparel for climbing, mountaineering, backpacking, skiing and other outdoor recreation activities. 

The company’s expected earnings growth rate for the current year is 41.4%. The Zacks Consensus Estimate for current-year earnings has improved 8.8% over the past 60 days. Clarius sports a Zacks Rank #1.

Smith & Wesson Brands, Inc. (SWBI - Free Report) 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 carries a Zacks Rank #1.

Brunswick Corporation (BC - Free Report) 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; Attwood and Whale marine parts and accessories; Land 'N' Sea, Kellogg Marine, Diversified Marine, BLA and Bell RPG parts and accessories distributors.

The company’s expected earnings growth rate for the current year is 26%. The Zacks Consensus Estimate for current-year earnings has improved 0.5% over the past 60 days. Brunswick Corporationholds a Zacks Rank #2.

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