The Zacks Analyst Blog Highlights: G-III, Carter's, Rent-A-Center, Ralph Lauren And Comcast
Zacks Investment Research | Apr 30, 2019 10:38PM ET
For Immediate Release
Chicago, IL – May 1, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include G-III Apparel Group, Ltd. (NASDAQ:GIII) , Carter's, Inc. (NYSE:CRI) , Rent-A-Center, Inc. (NASDAQ:RCII) , Ralph Lauren Corporation (NYSE:RL) and Comcast Corporation (NASDAQ:CMCSA) .
Here are highlights from Tuesday’s Analyst Blog:
Consumer Spending Highest in Nearly 10 Years: 5 Picks
After a sluggish start to the year, personal consumption expenditures soared in March. Personal income also increased modestly while inflation remained below the Fed target. This new report from the Department of Commerce provides fresh evidence that the economy is gaining momentum in the second quarter.
Data on retail sales released earlier this month revealed that the metric had experienced its largest increase in 18 months in March. This report also hinted that the economy is gathering steam as the year is progressing.
Recently released data on durable orders and new home sales have also been extremely encouraging. This is why it makes sense to add consumer discretionary stocks to your portfolio at this time.
Highest Increase in Nine and a Half Months
In March, consumer spending increased by 0.9%. This was the largest monthly increase registered since August 2009. Last month’s surge was primarily driven by higher spending on motor vehicles and healthcare. In February, personal consumption expenditures increased by 0.1%.
Additionally, January’s initially reported increase of 0.1% was revised upward to reflect an increase of 0.3%. Adjusting for inflation, consumer spending increased 0.7% in March after remaining flat in February.
The rise in real consumer spending allays fears of a slowdown in consumption, suggesting instead that a pickup is likely in the second quarter. These concerns were triggered by the latest GDP report which revealed that consumer spending increased 1.2% in the first quarter, the slowest pace recorded in a year.
Inflation Flat; Retail Sales, Durable Orders Raise Optimism
Inflation levels remained sluggish in March while core PCE inflation remained flat. This is the lowest pace registered since September 2017 and brings the yearly rate down to 1.6% from 1.7% in February. This is the smallest yearly increase since January 2018.
Since the core PCE inflation index is well below the Fed’s target of 2%, this latest reading more or less rules out a near-term change in rates. Personal income registered a modest 0.1% increase following a 0.2% gain in February.
Even this moderate growth in income suggests that consumer spending is likely to remain firm in the second quarter, supported by a strong labor market and steady wage gains.
Incidentally, retail sales also posted their largest increase in 18 months in March, giving further credence to forecasts of a pickup in consumption in the second quarter. Meanwhile, durable goods orders increased by 1.3% in March, rising the maximum in eight months.
Also, new home sales increased 4.5% to a 16-month high in March. The strength of these metrics led New York Federal Reserve’s Nowcast model to increase its projection for second-quarter GDP growth from 1.92% to 2.08% on Apr 26.
Our Choices
The surge experienced in consumer spending witnessed last month provides fresh evidence that the economy is gathering steam in the second quarter. Moderate income growth and sluggish inflation are backing the trend.
And consumers’ spending power is being supported by a robust labor market and steady wage gains. This is why it makes sense to invest in consumer discretionary stocks. However, picking winning stocks may prove to be difficult.
This is where our Zacks Investment Research
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