The Zacks Analyst Blog Highlights: Lululemon, G-III, Upland, Clean Harbors And Herc

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 Lululemon Athletica Inc. (NASDAQ:LULU) , G-III Apparel Group Ltd. (NASDAQ:GIII) , Upland Software Inc. (NASDAQ:UPLD) , Clean Harbors Inc. (NYSE:CLH) and Herc Holdings Inc. (NYSE:HRI) .

Here are highlights from Tuesday’s Analyst Blog:

High Spending, Low Inflation to Boost Q2 Growth: 5 Picks

On Apr 29, the Department of Commerce reported that the U.S. consumer spending surged in March to its highest in nine and half years. Meanwhile, personal consumption expenditure (PCE) price index -- the Fed’s most-favored inflation gauge -- increased at the lowest rate in one and half years. The movement of these two Economic metrics in opposite direction indicates a strong GDP growth in the second quarter, followed by robust first-quarter GDP.

Consumer Spending in March Jumps

Consumer spending rose 0.9% in March, following an increase of 0.1% in February and 0.3% in January. The metric is highly important as it constitutes two-third of U.S. GDP. Consumer spending was up 2.9% year over year in March. Last week, the Bureau of Economic Analysis reported that personal consumption grew 1.2% in the first quarter of 2019, resulting in 3.2% growth in the GDP.

A high rate of consumer spending confirms that the economy is in a strong footing to likely result in solid second-quarter growth. Moreover, consumer and business spending are expected to get a boost ahead. The core durable goods data in March rose 1.3%, its highest in eight months. This is a closely watched metric for business spending plans. Notably, business spending accounts for 12% of U.S. GDP.

Benign Inflation Data

The PCE price inflation grew by 0.2% in March compared with 0.1% in February. Year over year, PCE price inflation grew 1.5% in March compared with 1.3% in February. However, the core PCE inflation (excluding volatile items like food and energy prices) remained flat in March. Year over year, core PCE inflation grew by 1.6%, way below the Fed’s target rate of 2%. Notably, household inflation – measured by core Consumer Price Index data -- grew 2% year over year in March, in line with the Fed’s target rate.

Fed Likely to Maintain Dovish Monetary Stance

On Apr 10, in its FOMC minutes, the Fed stated that the majority of its members have decided to stick to the central bank’s March decision of not hiking interest rate, signifying that the benchmark interest rate will remain within its existing range of 2.25-2.5%.

The U.S. labor market remains robust. Unemployment rate is at its 50-year low level of 3.8%. Job data for March also revealed that the average wage rate increased 0.14%. The wage rate increased 3.2% year over year in March.

Despite a record-low unemployment level and rising nominal wage rate, inflation remains within the target level of the central bank. This compelled the Fed to stick to its stand of not raising interest rate in 2019. In fact, the Trump administration earnestly wants the central bank to reduce interest rate. President Trump claimed earlier that the U.S. economy might have grown well more than 3% instead of 2.9% in 2018 had the Fed refrained from raising rate by 1% throughout the year.

Our Top Picks

The U.S. economy is likely to maintain its long-term growth albeit at a slow pace. Consequently, investment in stocks with a strong growth potential will be lucrative. Our selection is backed by a Zacks Investment Research

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Written By: Zacks Investment Research