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The Zacks Analyst Blog Highlights: BJ's Wholesale Club, Perdoceo Education, Take-Two Interactive Software, Duluth and Vista Outdoor

Zacks Equity Research

For Immediate Release

Chicago, IL – May 28, 2020 – 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: BJ's Wholesale Club Holdings, Inc. BJ, Perdoceo Education Corp. PRDO, Take-Two Interactive Software, Inc. TTWO, Duluth Holdings Inc. DLTH and Vista Outdoor Inc. VSTO.

Here are highlights from Wednesday’s Analyst Blog:

US Consumer Confidence Rises as Economy Reopens: 5 Solid Buys

U.S. consumer confidence stabilized in May, indicating Americans are quite hopeful that the economic drubbing from the novel coronavirus outbreak worldwide will be short-lived. What’s more, Americans are now more optimistic about their future conditions as gradual re-opening of the economy helps lift spirits.

And with more confident Americans, things are looking up for consumer discretionary companies in particular.

Consumer Confidence Picks Up in May

According to the Conference Board, the consumer confidence index went up to 86.6 in May from a revised 85.7 in April. This came after rapid declines in the index in March and April. Confidence took a beating in those months after the coronavirus outbreak ravaged Main Street as well as Wall Street. 

Nonetheless, in May, an index that measures how Americans feel about their income, business, economic and labor market conditions in the next six months, or the so-called future expectations index edged up to 96.9 from 94.3. 

By the way, a separate survey by the University of Michigan also showed an improvement in consumer sentiment in early May. The preliminary reading on consumer sentiment for the month of May ticked up to 73.7 from 71.8 in April.

Lynn Franco, senior director of economic indicators at The Conference Board, meanwhile said that “following two months of rapid decline, the free-fall in Confidence stopped in May.”

What Drove the Confidence?

There are good reasons for the rebound in confidence. As states are letting businesses reopen, indicating that the economy is back on track, consumers’ sentiment improved. Economic restrictions related to COVID-19 are being gradually removed and there are ample signs that Americans are feeling safe to travel and congregate in larger numbers.

Federal aid in the form of stimulus checks, extra jobless benefits, contributions to salaries paid by small business houses and a low interest rate environment also lifted consumers’ spirits. Lest we forget, policymakers trimmed the benchmark federal funds rate a full percentage point to a range of zero to 0.25% in order to pump cash into the financial system and help banks provide more loans to businesses and households.

At the same time, widespread discounts on prices of consumer goods have made it easier for consumers to weather the storm in May. 

Why Does Consumer Confidence Matter?

Such an improvement in consumer confidence number is a significant reading since it has been, historically, good at predicting consumer spending for the next three to six months. This is because the more the confidence households generate, the more will they spend.

Notably, consumer spending accounts for roughly 70% of the U.S. economy, which isn’t a petty number.

5 Top Gainers

The consumer discretionary sector is mostly affected as spending plays a major role in determining revenues. But since spending is expected to improve on better consumer confidence, picking stocks from the consumer discretionary sector seems like a smart move. 

We have, thus, selected five consumer discretionary stocks that flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). The stocks also boast a VGM Score of A or B. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.

BJ's Wholesale Club Holdings, Inc. operates as a warehouse club on the East Coast of the United States. The company currently has a Zacks Rank #1 and VGM Score of A. The company’s expected earnings growth rate for the current quarter and year is 23.1% and 19.9%, respectively.

Perdoceo Education Corp. operates colleges, institutions, and universities that provide education to student population in various career-oriented disciplines. The company currently has a Zacks Rank #1 and VGM Score of A. Its expected earnings growth rate for the current and next year is 10.2% and 13.9%, respectively.

Take-Two Interactive Software, Inc. develops, publishes, and markets interactive entertainment solutions for consumers. The company currently has a Zacks Rank #2 and VGM Score of B. The company’s expected earnings growth rate for the current quarter is 145.8%.

Duluth Holdings Inc. sells casual wear, workwear, and accessories for men and women under the Duluth Trading brand in the United States. The company currently has a Zacks Rank #2 and VGM Score of A. The company’s expected earnings growth rate for the next year is 180%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Vista Outdoor Inc. designs, manufactures, and markets consumer products for outdoor sports and recreation markets in the United States. The company currently has a Zacks Rank #2 and VGM Score of A. The company’s expected earnings growth rate for the current quarter and year is 50% and 54.2%, respectively.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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TakeTwo Interactive Software, Inc. (TTWO) : Free Stock Analysis Report
 
BJs Wholesale Club Holdings, Inc. (BJ) : Free Stock Analysis Report
 
Vista Outdoor Inc. (VSTO) : Free Stock Analysis Report
 
Duluth Holdings Inc. (DLTH) : Free Stock Analysis Report
 
Career Education Corporation (PRDO) : Free Stock Analysis Report
 
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