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4 Solid Stocks to Buy on Rising Personal Income, Spending

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Rising inflation has been a cause of concern but consumers have been spending aggressively. According to the latest report from the Commerce Department, both personal income and personal consumption expenditures jumped in October, despite the rising prices of goods.

With the vaccination drive in full swing, people are a lot more confident now and planning vacations, eating out and spending more freely. Moreover, consumer spending is likely to increase further during the ongoing holiday season. Thus, investing in consumer discretionary stocks like Bluegreen Vacations (BVH - Free Report) , Hilton Grand Vacations (HGV - Free Report) , Pool Corporation (POOL - Free Report) and Vista Outdoor (VSTO - Free Report) would be ideal.

PersonalIncome, Personal Spending Jump

The Commerce Department said on Oct 1 that U.S. personal consumption expenditures (“PCE”) rose 1.3% in October to $214.3 billion on a month-over-month basis. Personal spending increased 0.6% in September.

Also, October’s jump was higher than the expected rise of 0.9%. On an annual basis, the PCE price index increased to 5% in October from 4.4% in September. October’s rise in personal consumption spending is also the highest since March.

Personal income increased 0.5% month over month in October, beating analysts’ expectations of a rise of 0.3%. Consumer spending accounts for more than two-thirds of U.S. economic activity.

Understandably, the rise in income has been helping people spend more aggressively. October’s rise in personal spending comes despite growing inflation. However, people don’t seem to mind that and are spending aggressively.

Economy on Solid Ground

Labor costs have been rising in the United States, helping people earn more. According to the Commerce Department’s report, wages and salaries increased 0.8% in October on a month-over-month basis.

The report further shows that spending rose both on goods and services. Spending on merchandise after adjusting inflation increased 1% in October, while outlays for services rose 0.5%.

People are finally getting back to work and employers are willing to pay more to fill up vacancies. Even then, there is a huge shortage of labor force. Growing income, owing to a rise in wages and salaries, is thus giving people additional spending power.

Also, the holiday season has begun and people are planning vacations.They are expected to shop more aggressively during this period. Thus, personal spending is only likely to increase in the coming days.

Our Choices

Given this situation, consumer discretionary stocks look like ideal investments. The Consumer Discretionary Select Sector SPDR (XLY) has returned 30.2% year to date.

Bluegreen Vacations operates as a vacation ownership company. BVH markets and sells vacation ownership interests and manages resorts in leisure and urban destinations. Bluegreen Vacations Holding Corporation is based in Fort Lauderdale, FL. Bluegreen Vacationsalso provides resort management, mortgage servicing, title services, reservation, and construction design and development services; and financing to qualified VOI purchasers, as well as management services to the vacation club and homeowners' associations.

Bluegreen Vacations’expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings improved 37.9% over the past 60 days. Shares of BVH have rallied 30.6% in the past 30 days. Bluegreen Vacations sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Hilton Grand Vacations, a division of Hilton Worldwide, is engaged in the hospitality business. HGV markets and operates vacation ownership resorts. Hilton Grand Vacations recently came up with quarterly earnings of 90 cents per share, beating the Zacks Consensus Estimate of 38 cents. 

Hilton Grand Vacations’expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings improved 56.8% over the past 60 days. Shares of HGV have rallied 6.6% in the past 30 days. Hilton Grand Vacationshas a Zacks Rank #1.

Pool Corporation is the world's largest wholesale distributor of swimming pool supplies, equipment and related products. In addition, POOL is a leading regional wholesale distributor of irrigation and landscape products. Pool Corporation recently reached an agreement to acquire Largo, FL-based Porpoise Pool & Patio, Inc., which comprises its main operating subsidiaries — Sun Wholesale Supply, Inc. and Pinch A Penny, Inc.

Pool Corporation’s expected earnings growth rate for the current year is 80.2%. The Zacks Consensus Estimate for current-year earnings improved 7.5% over the past 60 days. Shares of POOL have gained 12.7% in the past 30 days. Pool Corporation carries a Zacks Rank #1.

Vista Outdoor develops, manufactures and distributes optics, accessories and eyewear. VSTO operates in two segments: Shooting Sports and Outdoor Products. Vista Outdoor’sproducts include binoculars, laser rangefinders, riflescopes, trail cameras, archery accessories, blinds, decoys, game calls, gun care products, safety and protective eyewear, and fashion and sports eyewear. 

Vista Outdoor’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings improved 29.6% over the past 60 days. Shares of VSTO have jumped 7.9% in the past 30 days. Vista Outdoorcarries a Zacks Rank #1.