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Ignore The 'Experts' And Buy These Stocks
Monday's consumer spending report was lower than expected, but it didn't stop the market from continuing to snatch up shares of consumer discretionary stocks. That makes sense: employment gains are coming in strong; personal income is rising; and energy prices have yet to rally. It all adds up to a pretty picture for companies dependent on Americans spending on nonessential goods and services this year.
I wouldn't add to your holdings in Mohawk and Disney at this point, although both are certainly worthy of holding, and adding to on declines. Here are two more consumer discretionary stocks I have on my watch list now:
I recommended Brunswick Corp. (NYSE: BC) in March, and the stock is up more than 15% since then. One of the world's leading manufacturers of recreation products, Brunswick specializes in marine and fitness equipment; it is also the #1 maker of billiards equipment. With global economies still weaker than ours, I like the fact that 80% of Brunswick's revenue comes from the United States Recreational boating sales also should continue to benefit from low gasoline prices and the aging baby boomer population. And the firm's fitness equipment sales will continue to get a boost from Americans' increasing obsession with exercise.
Dick's has invested heavily in seamlessly integrating its online and in-store experiences and offers customers extra flexibility through features like "order online and pick up in store" buying and on-site search functionality on the mobile app. Online sales provide higher profit margins and allow Dick's to sell beyond its geographic footprint; they also allow the company to compete head to head on price with online-only retailers like Amazon.
Dick's has rallied since Sports Authority's initial bankruptcy announcement in mid February, but the stock still trades at a reasonable 16.2 times analysts' consensus estimate for fiscal 2016 earnings (ends January 2017) and well below its 52-week high of $56.94, which I consider a viable short-term target.
