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4 Stocks to Buy as Consumer Confidence Rebounds in October

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U.S. consumer confidence, which had been dented for the past few months, bounced back in October as fears of coronavirus somewhat eased. The Delta variant of the coronavirus saw confidence taking a blow, but declining cases over the past month have seen people once again stepping out of their homes confidently.

The vaccination drive too is in full swing, which is making people more confident. The jump in consumer confidence in October once again proves that the economy is on track for a speedy recovery.

Consumer Confidence Rebounds

The Conference Board said on Oct 26 that consumer confidence increased to 113.8 in October from September’s reading of 109.8. Economists had expected consumer confidence to decline to 108. October’s jump follows three straight months of decline, stemming from the Delta variant of the coronavirus.

Based on consumers' gauge of the current business and labor market conditions,the measure of consumer sentiment rose to 147.4 in October from 144.3 recorded last month.

Also, the Expectations Index, or the measure of expectations, which calculates consumers’ short-term outlook for income, business and labor market conditions, increased significantly to 91.3 from 86.7 in September.

Economic Reopening Driving Consumer Confidence

The massive vaccination drive is another driver of consumer confidence. With the economy reopening, people are stepping out of their houses and planning holidays or visiting stores.

This has led to a jump in retail sales. The Census Bureau said on Oct 15 that retail sales rose 0.7% in September, beating analysts’ expectations of a 0.2% decline. Also, restaurant sales grew 0.3% month over month in September. This once again shows that with rising confidence, people are willing to spend more.

The survey conducted by the Conference Board also showed that more people are planning to buy homes, automobiles and home appliances. Moreover, with the holiday season coming up, people are likely to indulge in shopping, traveling and holidaying.

Given this situation, consumer discretionary seems to be an ideal space to invest in. The Consumer Discretionary Select Sector SPDR (XLY) has returned 22.9% year to date.

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.

Party City Holdco Inc. (PRTY - Free Report) is involved in the design, manufacture and contracts for manufacturing and distribution of party goods, including paper and plastic tableware, metallic and latex balloons, Halloween and other costumes, accessories, novelties, gifts and stationery.

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 4.5% over the past 60 days. Party City has a Zacks Rank #2.

Pool Corporation (POOL - Free Report) is the world's largest wholesale distributor of swimming pool supplies, equipment and related products. In addition, the company is a leading regional wholesale distributor of irrigation and landscape products. 

The company’s expected earnings growth rate for the current year is 80.2%. The Zacks Consensus Estimate for current-year earnings improved 6.8% over the past 60 days. Pool Corporation has a Zacks Rank #1.

Clarus Corporation (CLAR - Free Report) engages in the design, manufacture and marketing of outdoor equipment and apparel for climbing, mountaineering, backpacking, skiing and other outdoor recreation activities. Its brands include Black Diamond and PIEPS. Black Diamond Equipment manufactures active outdoor equipment and clothing for the climbing, skiing and mountain sports markets. 

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings improved 27% over the past 60 days. Clarus has a Zacks Rank #1.

Madison Square Garden Entertainment Corp. (MSGE - Free Report) provides entertainment experiences. The company presents or hosts events in its diverse venues: New York's Madison Square Garden, Hulu Theater at Madison Square Garden, Radio City Music Hall and Beacon Theatre; the Forum in Inglewood, CA and The Chicago Theatre. Also, under the MSG Entertainment umbrella is Tao Group Hospitality, with entertainment dining and nightlife brands, including Tao, Marquee, Lavo, Avenue, Beauty & Essex and Cathédrale.

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 more than 100% over the past 60 days. Madison Square Garden has a Zacks Rank #2.