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US Consumers Gain Confidence in Economy: 5 Winners

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It’s been six months that the coronavirus pandemic has been ravaging the U.S. economy. But now, it seems that Americans have started to feel confident about their well-being. Not only are they self-assured about their financial prospects but are also optimistic about the labor market condition, business environment and economic recovery in the short term.
 
After all, the index of consumer confidence jumped 15.5 points to 101.8 in September from August’s upwardly revised 86.3, according to the Conference Board. It’s the biggest one-month leap in 17 years and easily surpasses economists’ expectation of a reading of 90 for September.
 
Most importantly, the Expectations Index that indicates consumers’ near-term outlook for employment and economy came in at 104.0 in September, up from 86.6 in August. It also showed the largest gain since 2009.
 
Respondents, in fact, are pretty confident about purchasing big-ticket items in the near future. Many are willing to buy major appliances, a car or even a home. Needless to say, the percentage of consumers expecting their incomes to improve in the short term leaped to a six-month high of 17.5% from 13.0%.
 
Among the respondents, many expect better jobs and business in the months ahead. The percentage of consumers expecting the labor market situation to improve in the next six-month period increased to 33.1% from 29.9%, and those expecting business conditions to recover rose from 29.8% to 37.1%.
 
Talking about how consumers feel about the economy right now, the Present Situation index has also jumped from 85.8 to 98.5. Moreover, the percentage of consumers who feel that the present business condition is promising climbed to a five-month high of 18.3% from 16%. At the same time, the percentage of consumers who believe that jobs are abundant increased to 22.9% from 21.4%. Conversely, the percentage of those who claim jobs are hard to find slipped from 23.6% to 20.0%. And Americans are certainly returning to their jobs, while the unemployment rate remains low. Interestingly, reduction in employment benefits did little to hurt consumer sentiments. Lest we forget, the federal jobless stipend of $600 expired in the month of July and President Trump sanctioned $300 in weekly unemployment benefits.
 
Nonetheless, Senior Director of Economic Indicators at The Conference Board, Lynn Franco, summed up by saying that “a more favorable view of current business and labor market conditions, coupled with renewed optimism about the short-term outlook, helped spur this month’s rebound in confidence.”

How to Play the Rise in Consumer Confidence?

It goes without saying that such a heartening consumer confidence number signifies that Americans are now feeling much better about the economy and employment than at any point during the COVID-19 outbreak.
 
And the more the confidence households generate about their present situation as well as immediate future, the more they are likely to spend. And this propensity to spend more unquestionably bodes well for companies that largely sell non-essential items like home appliances, cars and entertainment products, to name a few.
 
Thus, picking stocks from the consumer discretionary sector at this point of time will be a smart move. We have, thus, selected five consumer discretionary stocks that flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). The stocks also boast a VGM Score of A or B. Here V stands for Value, G for Growth and M for Momentum, and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.
 
Whirlpool Corporation (WHR - Free Report) manufactures and sells home appliances and related products. The company currently has a Zacks Rank #2 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has moved 0.5% up over the past 60 days. The company’s expected earnings growth rate for the next year is 26.5%.
 
Central Garden Pet Company (CENT - Free Report) is one of the leading companies in the United States that supplies pet as well as lawn and garden products. The company currently has a Zacks Rank #1 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has climbed 21.1% over the past 60 days. The company’s expected earnings growth rate for the current year is 21.9%.
 
Lifetime Brands, Inc. (LCUT - Free Report) is a leading designer, marketer and distributor of kitchenware, cutlery & cutting boards. The company currently has a Zacks Rank #2 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 97.1% over the past 60 days. The company’s expected earnings growth rate for the current year is 53.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
 
LaZBoy Incorporated (LZB - Free Report) manufactures and distributes upholstery furniture products. The company currently sports a Zacks Rank #1 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has risen 67.9% over the past 60 days. The company’s expected earnings growth rate for the current and next year is 6.5% and 17.4%, respectively.
 
Hamilton Beach Brands Holding Company (HBB - Free Report) is a designer, marketer and distributor of branded electric household and specialty housewares appliances. The company currently has a Zacks Rank #2 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 4.8% over the past 60 days. The company’s expected earnings growth rate for the current year is 20.2%.

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