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On Oct 29, the Conference Board reported strong consumer confidence data for the month. Despite lingering trade conflict with China and uncertainty about the signing of a partial trade deal by the two countries in November and continuation of global economic slowdown, failed to deter general consumers’ sentiments on the United States.
Notably, consumer spending constitutes around 70% of the U.S. GDP while business spending generates nearly 12%. Therefore, strong consumer confidence indicates that the U.S. economy, which is currently in its record 11th year of expansion, is likely to maintain momentum.
Solid Consumer Confidence in October
For October 2019, the Conference Board's measure of consumer confidence index stands at 125.9, slightly below the revised reading of 126.3 in September (initially 125.1 reported). However, October’s reading missed the consensus estimate of 128.3.
The Present Situation Index, which gauges consumers’ views on current market conditions, climbed from 170.6 to 172.3. However, the Expectations Index, which is a measure of consumers’ short-term (for the next six months) outlook for income, business and labor market conditions, declined to 94.9 from 96.8 in September.
Despite a minor decline, Americans overall remain highly optimistic about the economy. As per Lynn Franco, director of economic indicators of the Conference Board, “Confidence levels remain high and there are no indications that consumers will curtail their holiday spending.” This comment comes as a huge relief for market participants after warnings of a recession in 2020 from several economists and financial researchers.
On Oct 25, the University of Michigan, which also conducts a similar study on U.S. consumer behavior, reported that consumer sentiment for October 2019 came in at 95.5 compared with 93.2 in the previous month. October’s reading was the highest in three months.
U.S. Economy Likely to Hold on to Momentum
With the advent of July 2019, the U.S. economy officially entered into the longest stretch of expansion at least since 1854. Despite a fall in the pace of growth, it can still amply deliver.
Moreover, the Fed, which is currently going through its two-day FOMC meeting, is likely to announce the third rate cut today (Oct 30) as indicated on Oct 8, by Fed Chairman Jerome Powell. He cited a slowdown in the job growth rate and muted inflation along with global economic slowdown as the primary reasons for a likely third rate cut this year in order to sustain U.S. economic expansion.
A drop in the benchmark lending rate, which is currently at 1.75-2%, will provide cheaper funds to businesses for investment as well as for consumers to invest in the stock market. As of Oct 30, per the CME FedWatch, more than 95% of respondents are looking for a third rate cut this month.
Our Top Picks
At this stage, it will be prudent to invest in consumer-centric stocks with strong growth potential. However, the selection process may be difficult. This is where our VGM Score comes in handy. We narrowed down our search to five such stocks, each with a Zacks Rank #1 (Strong Buy) and VGM Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows price performance of our five picks in the past three months.
Zumiez Inc. (ZUMZ - Free Report) operates as a specialty retailer of apparel, footwear, accessories, and hardgoods for young men and women. Its hardgoods include skateboards, snowboards, bindings, components and other equipment. The company has an expected earnings growth rate of 20.7% for the current year. The Zacks Consensus Estimate for the current year has improved by 13.7% over the past 60 days.
Genesco Inc. (GCO - Free Report) operates as a retailer and wholesaler of footwear, apparel, and accessories. It operates through four segments: Journeys Group, Schuh Group, Johnston & Murphy Group, and Licensed Brands. The company has an expected earnings growth rate of 22.3% for the current year. The Zacks Consensus Estimate for the current year has improved by 9.3% over the past 60 days.
Guess' Inc. (GES - Free Report) designs, markets, distributes and licenses lifestyle collections of apparel and accessories for men, women and children. It operates through five segments: Americas Retail, Americas Wholesale, Europe, Asia, and Licensing. The company has an expected earnings growth rate of 37.8% for the current year. The Zacks Consensus Estimate for the current year has improved by 9.7% over the past 60 days.
US Foods Holding Corp. (USFD - Free Report) is a foodservice distributor that serves independent and multi-unit restaurants, healthcare and hospitality entities, government and educational institutions. The company has an expected earnings growth rate of 13.3% for the current year. The Zacks Consensus Estimate for the current year has improved 3.1% over the past 60 days.
CURO Group Holdings Corp. is a diversified consumer finance company, providing consumer finance to a range of underbanked consumers in the United States, Canada, and the United Kingdom. The company has an expected earnings growth rate of 44.1% for the current year. The Zacks Consensus Estimate for the current year has improved 1.1% over the past 60 days.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
Image: Bigstock
Solid Consumer Confidence Confirms Economic Stability: 5 Picks
On Oct 29, the Conference Board reported strong consumer confidence data for the month. Despite lingering trade conflict with China and uncertainty about the signing of a partial trade deal by the two countries in November and continuation of global economic slowdown, failed to deter general consumers’ sentiments on the United States.
Notably, consumer spending constitutes around 70% of the U.S. GDP while business spending generates nearly 12%. Therefore, strong consumer confidence indicates that the U.S. economy, which is currently in its record 11th year of expansion, is likely to maintain momentum.
Solid Consumer Confidence in October
For October 2019, the Conference Board's measure of consumer confidence index stands at 125.9, slightly below the revised reading of 126.3 in September (initially 125.1 reported). However, October’s reading missed the consensus estimate of 128.3.
The Present Situation Index, which gauges consumers’ views on current market conditions, climbed from 170.6 to 172.3. However, the Expectations Index, which is a measure of consumers’ short-term (for the next six months) outlook for income, business and labor market conditions, declined to 94.9 from 96.8 in September.
Despite a minor decline, Americans overall remain highly optimistic about the economy. As per Lynn Franco, director of economic indicators of the Conference Board, “Confidence levels remain high and there are no indications that consumers will curtail their holiday spending.” This comment comes as a huge relief for market participants after warnings of a recession in 2020 from several economists and financial researchers.
On Oct 25, the University of Michigan, which also conducts a similar study on U.S. consumer behavior, reported that consumer sentiment for October 2019 came in at 95.5 compared with 93.2 in the previous month. October’s reading was the highest in three months.
U.S. Economy Likely to Hold on to Momentum
With the advent of July 2019, the U.S. economy officially entered into the longest stretch of expansion at least since 1854. Despite a fall in the pace of growth, it can still amply deliver.
Moreover, the Fed, which is currently going through its two-day FOMC meeting, is likely to announce the third rate cut today (Oct 30) as indicated on Oct 8, by Fed Chairman Jerome Powell. He cited a slowdown in the job growth rate and muted inflation along with global economic slowdown as the primary reasons for a likely third rate cut this year in order to sustain U.S. economic expansion.
A drop in the benchmark lending rate, which is currently at 1.75-2%, will provide cheaper funds to businesses for investment as well as for consumers to invest in the stock market. As of Oct 30, per the CME FedWatch, more than 95% of respondents are looking for a third rate cut this month.
Our Top Picks
At this stage, it will be prudent to invest in consumer-centric stocks with strong growth potential. However, the selection process may be difficult. This is where our VGM Score comes in handy. We narrowed down our search to five such stocks, each with a Zacks Rank #1 (Strong Buy) and VGM Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows price performance of our five picks in the past three months.
Zumiez Inc. (ZUMZ - Free Report) operates as a specialty retailer of apparel, footwear, accessories, and hardgoods for young men and women. Its hardgoods include skateboards, snowboards, bindings, components and other equipment. The company has an expected earnings growth rate of 20.7% for the current year. The Zacks Consensus Estimate for the current year has improved by 13.7% over the past 60 days.
Genesco Inc. (GCO - Free Report) operates as a retailer and wholesaler of footwear, apparel, and accessories. It operates through four segments: Journeys Group, Schuh Group, Johnston & Murphy Group, and Licensed Brands. The company has an expected earnings growth rate of 22.3% for the current year. The Zacks Consensus Estimate for the current year has improved by 9.3% over the past 60 days.
Guess' Inc. (GES - Free Report) designs, markets, distributes and licenses lifestyle collections of apparel and accessories for men, women and children. It operates through five segments: Americas Retail, Americas Wholesale, Europe, Asia, and Licensing. The company has an expected earnings growth rate of 37.8% for the current year. The Zacks Consensus Estimate for the current year has improved by 9.7% over the past 60 days.
US Foods Holding Corp. (USFD - Free Report) is a foodservice distributor that serves independent and multi-unit restaurants, healthcare and hospitality entities, government and educational institutions. The company has an expected earnings growth rate of 13.3% for the current year. The Zacks Consensus Estimate for the current year has improved 3.1% over the past 60 days.
CURO Group Holdings Corp. is a diversified consumer finance company, providing consumer finance to a range of underbanked consumers in the United States, Canada, and the United Kingdom. The company has an expected earnings growth rate of 44.1% for the current year. The Zacks Consensus Estimate for the current year has improved 1.1% over the past 60 days.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>