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Ward Off Market Obstacles With These 4 Solid Consumer Picks


U.S. markets took a breather after China's president expressed plans to lower tariffs on vehicles and work on intellectual property rights. However, a new issue flared up with a chemical attack in Douma close to the Syrian capital, Damascus. Consequently, the Trump administration is weighing its military actions against Syria. Per sources, the U.S. President is likely to strike soon as his team is working seriously on this issue. These actions might call for trouble between the United States and Russia, thus rattling the global economy.

Meanwhile, tech stock’s concerns about Facebook’s FB data breach scandal and apprehensions related to further rate hikes by the Fed continue to do the rounds.

Amid these headwinds, investors are quite confused as to which stock might fetch them good returns. To make the search easier we have handpicked a few stocks from the Consumer Discretionary sector that are doing well in this market scenario and have stellar past records.

Why the Consumer Discretionary Sector?

Despite afore-mentioned market repercussions, the Consumer Discretionary sector is grabbing attention because of a buoyant U.S. economy which offers multiple tailwinds.

The U.S. economy appears to be positive on improving consumer spending, tightening labor market, accelerating wages and increasing government expenditure. Per the Commerce Department, consumer spending that constitutes more than two-thirds of U.S. economic activity inched up 0.2% each in February and January. The outlook for the American consumer spending is also likely to improve further as the aforementioned positive factors linger.

Consequently, the Consumer Discretionary sector that houses textile-apparel, hotels and motels as well as other discretionary consumer products, gained 8% in the past year.

Further, the first-quarter 2018 outlook for the Consumer Discretionary sector looks good. Per the latest Earnings Outlook, quarterly earnings for the sector are anticipated to increase 7% year over year on 6.8% growth in revenues.

That said, we will here focus on the Textile – Apparel industry within the broader Consumer Discretionary space. Currently, the industry seems to be performing well as its players are adhering to solid omni-channel mantra with expansion of digital capabilities. Also, well-knit strategies like effective merchandise plans, customer-centric initiatives, loyalty programs have been boosting growth. Incidentally, the industry ranks among the top 39% of all Zacks industries.

Among the Textile – Apparel stocks, we have zeroed in on four companies with greater potential. Shares of these companies have also cruised ahead of the industry in a year. While any stock can witness a spike in price, it takes a real winner to consistently outperform the industry. These stocks also have impressive track record, excellent long-term earnings growth rate and favorable Zacks Rank.

With that said, our research shows that a stock with a Zacks Rank #1 (Strong Buy) or 2 (Buy), when combined with a VGM Score of A or B, has robust growth potentials.

4 Winners to Hook Up

Guess?, Inc. GES is a solid bet with an impressive earnings surprise history. The company has been riding high on strength in its Europe and Asia businesses, courtesy of constant store openings and expansion of e-commerce endeavors. Driven by the sturdy performance, this California-based company’s shares have skyrocketed 118.1% in a year, crushing the industry’s surge of 32.6%. Further, its VGM Score of A and a long-term earnings growth rate of 17.5% indicate its upside potential. Additionally, analysts are steadily growing optimistic on the company’s performance as its earnings estimates for the current year and next fiscal witnessed solid upward revisions over the last 30 days. Also, it sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Tailored Brands, Inc. TLRD, a Texas-based retailer, offers suits, denim, sportswear, outerwear, shoes, and accessories. The company has an impressive earnings history with an average beat of 50.9% in the trailing four quarters. This Zacks Rank #1 stock had a superb bull run in a year’s time, with shares up 135.4%, compared with the industry’s 32.6% upside. Moreover, earnings estimates for the impending quarter and fiscal 2018 witnessed a robust uptrend in the past month. We expect the trend to continue in the days ahead as it has an impressive long-term earnings growth rate of 16.5% and a VGM Score of A.

PVH Corp. PVH, the owner of Calvin Klein and Tommy Hilfiger brands, topped the earnings estimates for 15 straight quarters. The company also has been witnessing solid momentum in international regions. Furthermore, its efforts to keep pace with the evolving consumer trends and healthy cash flows bode well. This Zacks Rank #2 stock surged a whopping 62.6% in the past year, outperforming its industry’s gain of 32.6%. We expect the company to reach greater highs on its brand strength, VGM Score of B and long-term earnings growth rate of 13%. In addition, the earnings estimates for the current year and next fiscal moved north in a month.

Finally, we have Ralph Lauren Corporation RL, a major designer and marketer of premium lifestyle products. It has a marvellous earnings history with 12 straight quarters of beat and an expected long-term earnings growth rate of 10.2%. The company’s Way Forward Plan is on track, which focuses on bolstering digital and international presence. Additionally, currency is working in favor of this New-York based company, which is likely to aid revenues and operating margins in the forthcoming quarters. While the stock soared 44.1% in the past year, the industry gained 32.6%. This Zacks Rank #2 company still has momentum left in the stock with a VGM Score of B.

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