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 FBdata 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 Discretionarysector 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 – Apparelindustry 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 Scoreof A or B, has robust growth potentials.