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Personal Income, Personal Spending Continue to Rise: 4 Winners
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Inflation is at a 40-year high and the Fed is aggressively hiking rates. Rising commodity prices have made people spend cautiously. However, they are still spending quite aggressively, which has seen retail sales increasing steadily over the past few months. One of the major reasons behind this is that income is also on the rise.
A rise in personal income has seen people spend aggressively, which despite rising costs, isn’t pinching their pockets. Also, people are spending on travel, vacations and outdoor entertainment due to a rise in income. Thus, investing in consumer discretionary stocks like Funko, Inc. (FNKO - Free Report) , Cedar Fair, L.P. (FUN - Free Report) , Pool Corporation (POOL - Free Report) and Bluegreen Vacations Holding Corporation would be ideal.
Personal Income, Personal Spending Increase
In April, U.S. consumers kept spending aggressively despite fresh indications that inflation may have peaked for the current cycle. The higher spending is a result of higher personal income. The Commerce Department said on May 27 that personal spending rose 0.9% in April, after a revised gain of 1.4% in March. The core Personal Consumption Expenditure (“PCE”) rose 0.3%, in line with expectations.
Personal income on the other hand rose 0.4%, which came in slightly lower than expectations. Consumer spending accounts for more than two-thirds of U.S. economic activity.
Despite rising prices, consumer consumption increased in April. Understandably, people have been spending more aggressively as their income has increased. People, on the other hand, don't appear to mind and are spending freely.
Moreover, the good sign is that the PCE price index slowed sharply in April, rising just 0.2%. The PCE price index had jumped 0.9% in March and accelerated at double the pace over the past few months. This probably is another sign that people have been spending at a higher rate.
Economy Still Strong
The pace of growth might have slowed lately but the foundation for economic recovery seems to be on solid ground given that personal income and spending are rising despite major challenges.
Moreover, labor costs have been on the rise over the past year. This is making companies pay workers more now, which is giving a boost to the income of people. Wages and salaries grew 0.3% month over month in April, according to the Commerce Department's data. Wages and salaries now increased 3.7% in the past three months, if pay gains were annualized.
However, there still remains a severe labor shortage. Hiring is on the rise though, indicating that more people are returning to work, which means an overall gain in personal income in the coming months.
Also, people are planning holidays and stepping out of their homes more confidently after getting vaccinated. This is accelerating the pace of spending, which is likely to continue in the near term as personal income continues to grow.
Funko, Inc. is a pop culture consumer products company. FNKO offers figures, plush, apparel, toys, vinyl, bags, wallets, homewares and accessories under Mystery Minis, Dorbz, Pint Size Heroes, Rock Candy, Galactic or Hero Plushies, SuperCute, MyMoji and Loungefly brands. Funko sells its products through specialty retailers, mass-market retailers and e-commerce sites.
Funko’s expected earnings growth rate for the current year is 31%. The Zacks Consensus Estimate for current-year earnings has improved 3.3% over the past 60 days. FNKO has a Zacks Rank #1.
Cedar Fair, L.P. and its affiliated companies own and operate five amusement parks: Cedar Point, Knott's Berry Farm, Dorney Park & Wildwater Kingdom, Valleyfair, and Worlds of Fun/Oceans of Fun. FUN’s parks are family-oriented, with recreational facilities for people of all ages, and provide clean and attractive environments with exciting rides and entertainment. Cedar Fair also owns and operates four hotel facilities.
Cedar Fair’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 23.8% over the past 60 days. FUN sports 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 was incorporated in the State of Delaware in 1993 and grew from a regional distributor to a multi-national, multi-network distribution company.
Pool Corporation’s expected earnings growth rate for the current year is 22.1%. The Zacks Consensus Estimate for current-year earnings has improved 5.2% over the past 60 days. POOL carries a Zacks Rank #1.
Bluegreen Vacations Holding Corporation operates as 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 Vacations Holding Corporation’s expected earnings growth rate for the current year is 35.1%. The Zacks Consensus Estimate for current-year earnings has improved 11.9% over the past 60 days. BVH carries a Zacks Rank #2.
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Personal Income, Personal Spending Continue to Rise: 4 Winners
Inflation is at a 40-year high and the Fed is aggressively hiking rates. Rising commodity prices have made people spend cautiously. However, they are still spending quite aggressively, which has seen retail sales increasing steadily over the past few months. One of the major reasons behind this is that income is also on the rise.
A rise in personal income has seen people spend aggressively, which despite rising costs, isn’t pinching their pockets. Also, people are spending on travel, vacations and outdoor entertainment due to a rise in income. Thus, investing in consumer discretionary stocks like Funko, Inc. (FNKO - Free Report) , Cedar Fair, L.P. (FUN - Free Report) , Pool Corporation (POOL - Free Report) and Bluegreen Vacations Holding Corporation would be ideal.
Personal Income, Personal Spending Increase
In April, U.S. consumers kept spending aggressively despite fresh indications that inflation may have peaked for the current cycle. The higher spending is a result of higher personal income. The Commerce Department said on May 27 that personal spending rose 0.9% in April, after a revised gain of 1.4% in March. The core Personal Consumption Expenditure (“PCE”) rose 0.3%, in line with expectations.
Personal income on the other hand rose 0.4%, which came in slightly lower than expectations. Consumer spending accounts for more than two-thirds of U.S. economic activity.
Despite rising prices, consumer consumption increased in April. Understandably, people have been spending more aggressively as their income has increased. People, on the other hand, don't appear to mind and are spending freely.
Moreover, the good sign is that the PCE price index slowed sharply in April, rising just 0.2%. The PCE price index had jumped 0.9% in March and accelerated at double the pace over the past few months. This probably is another sign that people have been spending at a higher rate.
Economy Still Strong
The pace of growth might have slowed lately but the foundation for economic recovery seems to be on solid ground given that personal income and spending are rising despite major challenges.
Moreover, labor costs have been on the rise over the past year. This is making companies pay workers more now, which is giving a boost to the income of people. Wages and salaries grew 0.3% month over month in April, according to the Commerce Department's data. Wages and salaries now increased 3.7% in the past three months, if pay gains were annualized.
However, there still remains a severe labor shortage. Hiring is on the rise though, indicating that more people are returning to work, which means an overall gain in personal income in the coming months.
Also, people are planning holidays and stepping out of their homes more confidently after getting vaccinated. This is accelerating the pace of spending, which is likely to continue in the near term as personal income continues to grow.
Our Choices
We have picked four 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.
Funko, Inc. is a pop culture consumer products company. FNKO offers figures, plush, apparel, toys, vinyl, bags, wallets, homewares and accessories under Mystery Minis, Dorbz, Pint Size Heroes, Rock Candy, Galactic or Hero Plushies, SuperCute, MyMoji and Loungefly brands. Funko sells its products through specialty retailers, mass-market retailers and e-commerce sites.
Funko’s expected earnings growth rate for the current year is 31%. The Zacks Consensus Estimate for current-year earnings has improved 3.3% over the past 60 days. FNKO has a Zacks Rank #1.
Cedar Fair, L.P. and its affiliated companies own and operate five amusement parks: Cedar Point, Knott's Berry Farm, Dorney Park & Wildwater Kingdom, Valleyfair, and Worlds of Fun/Oceans of Fun. FUN’s parks are family-oriented, with recreational facilities for people of all ages, and provide clean and attractive environments with exciting rides and entertainment. Cedar Fair also owns and operates four hotel facilities.
Cedar Fair’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 23.8% over the past 60 days. FUN sports 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 was incorporated in the State of Delaware in 1993 and grew from a regional distributor to a multi-national, multi-network distribution company.
Pool Corporation’s expected earnings growth rate for the current year is 22.1%. The Zacks Consensus Estimate for current-year earnings has improved 5.2% over the past 60 days. POOL carries a Zacks Rank #1.
Bluegreen Vacations Holding Corporation operates as 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 Vacations Holding Corporation’s expected earnings growth rate for the current year is 35.1%. The Zacks Consensus Estimate for current-year earnings has improved 11.9% over the past 60 days. BVH carries a Zacks Rank #2.