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Consumer Spending Rebounds in March: 5 Solid Stocks to Buy

U.S. consumer spending jumped in March as millions of Americans spent more freely after receiving the second round of stimulus checks. This once again shows that people are showing confidence in the economy, which is rebounding at a steady pace.

Also, personal income rose in March coupled with a decline in jobless claims. With the vaccination drive in full swing, people are also a lot more confident and are spending at ease, resulting in the growth of consumer confidence in March.

Consumer Spending Rebounds

Consumer spending jumped a solid 4.2% in March, after declining 1% in February, according to the Commerce Department. Consumer spending accounts for almost two-thirds of total U.S. activity and the figure definitely indicates that people are showing more faith in the economy.

Moreover, consumer spending, despite declining in February, increased 10.7% in the first quarter. One of the major reasons behind this jump is that millions of middle and low-income groups started receiving the $1,400 stimulus checks in February, which made them spend more freely last month. The additional checks saw personal income surging 21.1% in March after a decline of 7% in February.

Economy Making Solid Progress

A rise in consumer spending coupled with a jump in personal income has given people more confidence. Consumer confidence jumped to a reading of 121.7 in April from 109 in March. This is also the highest level since February 2020, the time when the pandemic struck the United States.

An increase in personal spending also saw the savings rate surging to a solid 27.6% in March from 13.9% a month earlier. This indicates that the stimulus checks have been boosting both the income and confidence of people.

Besides, as new cases continue to fall and more people get vaccinated every day, many states have started easing restrictions and the economy is fast getting back on its feet.This has seen the unemployment rate declining. Jobless claims fell for the third week in a row to 553,000 for the week ended Apr 24. This is also the lowest level since the pandemic first caused mass layoffs in March 2020.

Given this situation, consumer discretionary stocks seem to be an ideal sector to invest in. The Consumer Discretionary Select Sector SPDR (XLY) has returned 53.5% in the past year.

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.

Pool Corporation POOL 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 more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 15.3% over the past 60 days. Pool Corporation carries a Zacks Rank #2 (Buy).

Brunswick Corporation BC endeavors to instill Genuine Ingenuity in all its leading consumer brands, including Mercury and Mariner outboard engines; Mercury MerCruiser sterndrives and inboard engines; MotorGuide trolling motors; Attwood and Whale marine parts and accessories; Land 'N' Sea, Kellogg Marine, Diversified Marine, BLA and Bell RPG parts and accessories distributors.

The company’s expected earnings growth rate for the current year is 26%. The Zacks Consensus Estimate for current-year earnings has improved 0.5% over the past 60 days. Brunswick Corporation holds a Zacks Rank #2.

Funko, Inc. FNKO is a pop culture consumer products company. It 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.

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 63.2% over the past 60 days. Funko has a Zacks Rank #2.

Clarus Corporation CLAR engages in design, manufacture and marketing of outdoor equipment and apparel for climbing, mountaineering, backpacking, skiing and other outdoor recreation activities.

The company’s expected earnings growth rate for the current year is 41.4%. The Zacks Consensus Estimate for current-year earnings has improved 8.8% over the past 60 days. Clarus Corporation carries a Zacks Rank #2.

Central Garden Pet Company CENT is looking forward to strengthening its position as one of the leading companies in U.S. pet supplies, and lawn and garden supply spaces. Unique packaging, point-of-sale displays, logistic capabilities and a high level of customer service are some of its key growth catalysts.

The company’s expected earnings growth rate for the current year is 7.5%. The Zacks Consensus Estimate for current-year earnings has improved 15.7% over the past 60 days. Central Garden Pet Company sports a Zacks Rank #1.

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Central Garden & Pet Company (CENT): Free Stock Analysis Report
 
Pool Corporation (POOL): Free Stock Analysis Report
 
Brunswick Corporation (BC): Free Stock Analysis Report
 
Clarus Corporation (CLAR): Free Stock Analysis Report
 
Funko, Inc. (FNKO): Free Stock Analysis Report
 
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