Per a recent University of Michigan survey, consumer sentiment grew visibly bullish in early June, aided by reopening of businesses and renewed hiring spree. The report suggests that the consumer confidence index increased to a reading of 78.9 earlier this month from 72.3 in May, marking the second straight gain after a record plunge in April.
The uptick in consumer confidence follows the Labour Department report, which states that the US economy unexpectedly regained 2.5 million nonfarm payroll employments in the month of May, lowering the unemployment rate by 1.4 percentage points to 13.3%.
According to Richard Curtin, chief economist, Surveys of Consumers: "The turnaround is largely due to renewed gains in employment, with more consumers expecting declines in the jobless rate than at any other time in the long history of the Michigan surveys".
The data was also in line with the analysts’ expectations, as improved jobs outlook lifted consumers’ spirits. A poll conducted by Reuters, shows economists anticipated the sentiment index to rise to 75 earlier this month.
Further, the University of Michigan posted gains on indices measuring the economic outlook and consumer expectations. The index mapping the current economic conditions witnessed a rise to 87.8 in June from 82.3 in May while the consumer expectations index surged to 73.1 from 65.9 in the prior month.
Hopes of Quick Economic Recovery Fading
While the resurgence in sentiment indicates that consumers are now more cheerful aboutan economic revival from the negative coronavirus impact, many believe that the economy will take years to come back on track.
Two thirds of consumers in the University of Michigan’s survey expect “unfavorable economic conditions during the year ahead.” Richard Curtin noted that while consumers are optimistic about job recapturing, many still see a long arduous road ahead.
Moreover,the possibility of a second wave of COVID-19 outbreak looms large, which dims the prospects of a rapid recovery.
At this stage, it will be better to invest in consumer-centric stocks with strong growth potential. We zoomed in on five such stocks that carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
B&G Foods, Inc. BGS manufactures, sells and distributes high quality, shelf stable, frozen food and household products across the United States, Canada and Puerto Rico. The company boasts a diversified portfolio of 50 brands, many of which grab a plum slice of the market in different regions. The company has a trailing four-quarter positive earnings surprise of 5.36%, on average. It is presently a #1 Ranked player.
Ollie’s Bargain Outlet Holdings, Inc. OLLI, headquartered in Harrisburg, PA, is a value retailer of brand name merchandise at throwaway prices. The company sells merchandise at prices up to 70% lower than the rates available at department and fancy stores, and up to 20-50% lower than mass-market retailers. The company has a trailing four-quarter positive earnings surprise of 4.65%, on average. It currently sports a Zacks Rank of 1.
Sprouts Farmers Market, Inc.SFM operates in a highly fragmented grocery store industry with focus on product innovation, e-commerce, expansion of private label assortment and enhancement of technology. The company has a trailing four-quarter positive earnings surprise of 37.17%, on average. The company is presently a Zacks #1 Ranked player.
Wayfair Inc.W, domiciled in Boston, MA, is one of the world's leading online sellers of home products, consisting of furniture and home decor. It operates worldwide through Wayfair.com and four other branded websites, namely Joss & Main, AllModern, Birch Lane and Perigold. In the past 60 days, 15 estimates for current-year earnings moved north for Wayfair. The company presently flaunts a Zacks Rank #1.
Dollar General CorporationDG, based in Goodlettsville, TN, is one of the largest discount retailers in the United States. This Zacks Rank #2 company offers a wider variety of merchandise including consumable items, seasonal items, home products and apparel. The company has a trailing four-quarter positive surprise of 16.90%, on average.
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