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4 Stocks to Buy as Consumer Confidence Hits 18-Year High

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U.S. consumer confidence index for the month of September jumped to an 18-year high of 138.4 from 134.7 in August.

Increasing for three months in a row, the index came well above the consensus estimate of 132.7 and hovered close to the all-time high of 144.7 recorded in May 2000.

Present Situation and Expectation Indices Up

While the present conditions measure rose modestly to 173.1, consumer expectations gauge increased six points to 115.3. Rise in both metrics indicates that spending momentum is likely to remain strong and this is good news for retailers, especially as the holiday shopping season approaches.

A Conference Board survey also depicted that consumer’s outlook about the labor market was more upbeat. Of the total respondents, 45.7% said jobs were "plentiful." According to Jennifer Lee, senior economist at BMO Capital Markets, “Knowing that the job market is strong, knowing that one has a regular paycheck, does wonders for confidence.”

Continued high level of confidence indicates that consumers are little worried about the ongoing and intensifying trade war.

Strong Expectations Indicate Sustained Economic Growth

Lynn Franco, Director of Economic Indicators at The Conference Board said that surge in the expectations index points toward economic growth of more than 3% for the remainder of the year.

In the second quarter, U.S. GDP grew 4.2%, almost doubling from 2.2% increase witnessed in the first quarter and recording the strongest performance in four years.  Also, the Fed has raised GDP estimates and now expects it to rise 3.1% in 2018 and 2.5% in 2019, up from the June forecast of 2.8% and 2.4%, respectively.

4 Great Picks

Given the increasing level of optimism, consumers are likely to splurge this holiday season. So, adding consumer discretionary stocks to your portfolio looks like a smart option at this point.

Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or #2 (Buy) offer the best investment opportunities for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.

So, we have narrowed down our search to the following stocks as they fit the criteria.

Weight management services provider Weight Watchers International, Inc. (WTW - Free Report) sportsa Zacks Rank #1 and has a VGM Score of B. The company has expected earnings growth rate of 80.6% for the current year. The Zacks Consensus Estimate for the current year improved 2.4% in the last 60 days.

Weight Watchers International Inc Price and Consensus

Recreational powerboats provider Malibu Boats, Inc. (MBUU - Free Report) also carries a Zacks Rank #1 and has VGM Score of B. The company expects earnings growth of more than 24.2% for the current year. The Zacks Consensus Estimate for the current year improved 12.9% in the last 60 days.

Malibu Boats, Inc. Price and Consensus

Manufacturer and distributer of kitchen, bath, and home organization products American Woodmark Corporation (AMWD - Free Report) carries a Zacks Rank #2 and has a VGM Score of A. The company’s expected earnings growth rate for the current year is 45.4%. The Zacks Consensus Estimate for the current year improved 1.1% in the last 60 days.

American Woodmark Corporation Price and Consensus

Casual wear, workwear, and accessoriesseller Duluth Holdings Inc. (DLTH - Free Report) carries a Zacks Rank #2 and has a VGM Score of B. The company expects earnings growth of 25.4% for the current year. The Zacks Consensus Estimate for the current year improved 3.7% in the last 60 days.

Duluth Holdings Inc. Price and Consensus

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

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