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5 Top Consumer Discretionary Stocks to Buy for Q4

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During the summer season, the spread of the more contagious Delta variant of the coronavirus impacted outlays on dining, hotels, and traveling. Still, consumers are better positioned to help the U.S. economy recover in the near term eventually. This is because, during the pandemic, consumers increased their savings and benefited from plenty of job openings and a rise in wages.

Thus, it’s expected that consumers will now splurge more on discretionary items than they did last year. In fact, consumers’ personal income went up 0.2% in August. Similarly, per the Commerce Department, personal spending on goods and services increased 0.8% in August following a decline of 0.1% in the prior month, citing a WallStreet Journal article.

No doubt, high inflation is weighing on consumer optimism. But adjusted for inflation, personal spending still picked up in August. Real personal outlays increased 0.4% in August, following a decline of 0.5% in July, as mentioned in a business times article. At the same time, the economy had already expanded at a healthy pace in the second quarter, indicating growth in consumer spending that has been the most significant source of economic growth.

By the way, Americans’ view about the economy improved last month, a tell-tale sign that consumers must be willing to spend in the near future. The WallStreet Journal article cited that as per a survey by the University of Michigan, the consumer sentiment index for September came in at 72.8, up from August’s reading of 70.3.

A greater number of consumers are likely to spend more in the coming holiday season in comparison to last year. Citing a bakemag article, according to the NPD Group, at least 29% of consumers in the United States are willing to spend more during the traditional November and December holiday period than they did last year. Moreover, holiday spending is expected to rise 3% during this year's November and December period from last year.

The NPD Group further found that six out of 10 consumers are now more comfortable visiting stores to purchase items once the health crisis has been controlled and vaccines are readily available.

So, the renewed strength in consumer outlays will unquestionably lift consumer discretionary stocks now and in the near future. We have, thus, selected five such stocks that possess a Zacks Rank #1 (Strong Buy) or 2 (Buy) and should make meaningful additions to your portfolio.

Crocs, Inc. (CROX - Free Report) is one of the leading footwear brands with a focus on comfort and style. The company has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved up 1.6% over the past 60 days. The company’s expected earnings growth rate for the current year is almost 144%.

Academy Sports and Outdoors, Inc. (ASO - Free Report) provides sporting goods and outdoor recreation retailers, principally in the United States. The company has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved up 36.9% over the past 60 days. The company’s expected earnings growth rate for the current year is 67.6%.

GIII Apparel Group, LTD. (GIII - Free Report) is a manufacturer, designer and distributor of apparel and accessories under licensed brands, owned brands and private label brands. The company has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved up 17.8% over the past 60 days. The company’s expected earnings growth rate for the current year is 341.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

La-Z-Boy Incorporated (LZB - Free Report) is one of the world's leading residential furniture producers, marketing furniture for every room of the home. The company has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has risen 15.1% over the past 60 days. The company’s expected earnings growth rate for the current year is 28.2%.

Vista Outdoor Inc. (VSTO - Free Report) develops, manufactures and distributes optics, accessories and eyewear. The company has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has climbed 0.2% over the past 60 days. The company’s expected earnings growth rate for the current year is 66.4%.