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5 Consumer Discretionary Stocks to Rise Post Pandemic

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Consumer discretionary is one of the sectors that has been battered by the coronavirus pandemic hugely. With bricks-and-mortar stores, theme parks, gaming arenas, theaters closed for months, businesses bore the brunt of the deadly virus.

Even when the economy began to reopen, several businesses catering to large gatherings like pubs, cinema halls and stadiums remained shutor allowed only a limited foot fall at the venue, adhering to social-distancing norms.

The pandemic did redefine consumer trends, especially purchasing patterns and this forced many companies to invest heavily in digitalization to save the sinking ship. But among the additional headwinds faced by the discretionary sector were the supply-chain disruption and material shortage.

Several companies sidetracked their main business and started making essentials required to check the spread ofthe pandemic. Apparel manufacturer Hanesbrands began manufacturing masks while Coty and Natura Cosmeticos are now producing hand sanitizers, soaps and hygiene-related products.

Looking ahead into 2021 and past the pandemic, prospects for the consumer discretionary sector seem bright. Per a CNBC article, a Morgan Stanley report estimated that “U.S. households have saved an extra $1.1 trillion as of August, compared to pre-pandemic levels.”

In the initial months of the COVID-19 outbreak, lockdown measures had prevented consumers from spending, hence, a considerable capital infusion is imperative to fund post pandemic discretionary purchases. This could boost the consumer discretionary sector as they might benefit from pent-up demand and an increase in social activities.

Spending on discretionary products suffers the most during an economic downturn. However, this sector tends to bounce back faster than others in aneconomic recovery. Per a Deloitte Insights report, consumer spending on durables jumped 89.2% between the second quarter of 2009 and fourth-quarter 2019. This is much higher than the increase in spending on nondurable goods (25.4%) and services (22.3%) during this period.

But the pandemic scenario is different from the previous financial downturns. The coronavirus compelled businesses to close down, inducing a scenario of unemployment and supply crunch. Therefore a vaccine against this deadly disease resume normalcy fast. Hopes of a new round of financial stimulus and news on vaccine development aided the markets to hit record highs on several occasions this year with consumers regaining confidence in the economy’s health.

5 Stocks to Buy

Given the positive development on the coronavirus vaccine front and the scope of a possible economic rebound, we shortlisted five consumer discretionary stocks that are poised to grow post pandemic.  What’s more? These stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Whirlpool Corporation (WHR - Free Report) manufactures and markets home appliances and related products. The company’s expected earnings growth rate for the current year is 11.4% against the Zacks Household Appliances industry’s projected earnings decline of 2%. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 39.3% upward over the past 60 days.

Crocs, Inc. (CROX - Free Report) designs, develops, manufactures, markets, and distributes casual lifestyle footwear and accessories for men, women and children. The company’s expected earnings growth rate for the next quarter is 63.4% against the Zacks Textile - Apparel industry’s projected earnings decrease of 22.5%. The Zacks Consensus Estimate for current-year earnings has been revised 27.1% upward over the past 60 days.

YETI Holdings, Inc. (YETI - Free Report) designs, markets, retails, and distributes products for the outdoor and recreation market. The company’s expected earnings growth rate for the current quarter is 45% compared with the Zacks Leisure and Recreation Products industry’s projected earnings growth of 8.8%. The Zacks Consensus Estimate for the company’s current-year earnings has moved 20.8% north over the past 60 days.

Rocky Brands, Inc. (RCKY - Free Report) designs, manufactures, and markets footwear and apparel. The company’s expected earnings growth rate for the current year is 3.5% against the Zacks Shoes and Retail Apparel industry’s projected earnings decline of 20.8%. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 42.4% upward over the past 60 days.

Vista Outdoor Inc. (VSTO - Free Report) designs, manufactures, and markets consumer products for outdoor sports and the recreation markets. The company’s expected earnings growth rate for the current year is more than 100% compared with the Zacks Leisure and Recreation Products industry’s projected earnings growth of 8.8%. The Zacks Consensus Estimate for the company’s current-year earnings has been raised 37.1% over the past 60 days.

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