The latest GDP numbers were released and it looks like the U.S. economy continues to expand. The initial third-quarter figure is 3.5%, which is very encouraging.
Granted, it isn’t the 4.2% pace of the previous quarter, but this is the most growth in two consecutive quarters in the past four years. It also puts the economy on pace to clock in for the entire year above 3%, which bodes well for consumer stocks.
But what is most interesting to us right now is the fact that while GDP cooled during Q3, consumer spending rose during the quarter faster than it did during Q2.
That’s a good sign that consumers are starting to open their wallets again.
Given this encouraging indicator, I thought it would be good to highlight my 10 A-rated consumer stocks to buy right now.
All get A ratings on their quantitative scores from my proprietary Portfolio Grader, which means that now is a great time to buy them.
BJ Restaurants (BJRI)
BJ Restaurants (NASDAQ:BJRI) has been around since the late 1970s, after getting its start in Huntington Beach, California.
Now it has over 200 restaurants in 27 states across the country. And this success has been built on the holy trinity of casual dining: unique pizza, quality beer selection and decadent desserts.
Now that’s not to say they don’t have healthier options — which it does on its EnLIGHTened menu — but when it comes to food most Americans agree on, BJRI has it covered.
And now that consumers are feeling better about their economic future, eating out will be increasingly popular. And that’s already showing up in the BJRI stock; it’s up 75% year to date.
Darden Restaurants (DRI)
Darden Restaurants (NYSE:DRI) is one of the biggest restaurant companies in the business. It owns iconic chains like Olive Garden and LongHorn Steakhouse after spinning off its Red Lobster chain a couple years ago.
But what is less known is some of Darden’s more upscale brands like The Capital Grille and Eddie V’s, which are high-end chop houses. It also has midrange restaurants like Seasons 52, Cheddar’s Scratch Kitchen, Yard House and Bahama Breeze.
This variety of options means DRI can hit every potential budget with its offerings. And when consumers go out to eat rather than stay home, DRI is likely to benefit.
Plus, its $13 billion market cap and 80-year track record mean it can capitalize on a good trend. Up 9% year to date, it also delivers a solid 2.8% dividend.
Domino’s (DPZ)
Domino’s Pizza Inc (NYSE:DPZ) is about as ubiquitous a food company as it gets. It’s hard to remember a time when pizza delivery took longer than 30 minutes, thanks to DPZ.
And in Washington D.C., journalists monitor the Domino’s around the White House to see when deliveries spike because they know if the White House is ordering in, something is happening inside.
That’s how you know you’ve become an American institution.
But even DPZ has had some challenges. From its cheap and fast early days, it has had to up the quality and slow the delivery in recent years while still delivering solid margins and healthy growth.
And few sectors are more competitive than pizza delivery, given every local market has competitors as well as regional and national chains that looking to take the king down a peg.
But DPZ stock continues to deliver (pun intended) — up 38% year to date with plenty more to come.
Weight Watchers (WTW)
Weight Watchers International (NYSE:WTW) is on the opposite end of the growing food spending trend. It’s still kind of a splurge but a responsible splurge.
The U.S. is a diet-obsessed nation and few things are more attractive — and more elusive — than an effective, tasty, convenient diet plan. This is especially true of the graying boomers who are dealing with chronic issues of obesity, diabetes, heart disease and score of other diet-related challenges.
The fact that Oprah Winfrey is a major investor tells you all you need to know about the repackaging and targeting of the new WTW branding. Oprah also is a celebrity that brings diet plans to demographic communities that have been left out of the picture all this time as well.
Up 49% year to date, WTW is still selling at a current price-to-earnings ratio of 21, with growing momentum.
Shake Shack (SHAK)
Shake Shack (NASDAQ:SHAK) started as fun idea for restaurateur Danny Meyer in a little shack in Madison Square Park in New York City. He thought it would be an interesting idea to offer quality burgers and hot dogs along with fries, frozen custard, beer and wine in a no-frills setting. Because all the products were handmade there was a premium … but it was worth it.
At the original shack, there’s wasn’t even a place to eat. You ordered and then found seating in the park or took it to go.
Now that business has a nearly $2 billion market cap and there are more than 140 Shake Shacks across the U.S. That kind of growth has certainly sent SHAK off to the races since its IPO in 2015.
But this is the kind of economy where SHAK is built to soar through increased revenue and growth. SHAK is up 21% year to date, which makes this a good time to get in.
Netflix (NFLX)
Netflix (NASDAQ:NFLX) hardly needs any backgrounder. This pioneer of streaming services is continuing to stay on the cutting edge of the new age of entertainment.
NFLX has built a global entertainment empire with original programming from nations around the world that can be cross-sold into major markets like the U.S. It’s next foray is India, the second-most-populous nation on Earth. After that, of course, it will focus on China.
While many analysts doomsay Netflix’s ability to continue its subscriber growth, it looks like NFLX has as much growth ahead of it as it does behind it. Up 60% year to date, if consumer-driven stocks are hot, NFLX is burning like the sun — and keeps going for about as long.
World Wrestling Entertainment (WWE)
World Wrestling Entertainment (NYSE:WWE) may not be your cup of tea, but that isn’t the case for a large swath of the households both in the U.S. and beyond.
Remember, WWE isn’t just about the U.S. Its media services broadcast matches, series, pay per view, you name it. On its website, it has four language options: English, German, Spanish and Arabic.
There are also events, venues that WWE owns, as well as all the official gear and clothing fans can buy. WWE stock has a $5.5 billion market cap — this is a big business.
And the stock is on fire. It’s up about 130% year to date and yet the P/E is 111, which may be high, but it’s not outpacing its growth. That means there are a lot of investors who see there is plenty more growth from this media juggernaut.
Planet Fitness (PLNT)
Planet Fitness (NASDAQ:PLNT) is a unique national health club franchise. It’s perfectly built for people who want to have access to a gym but don’t have schedules that match regular gym hours, or people who don’t want to spend a lot of money to get access to a gym. Or both.
Basically, there are two simple plans. One is a $10 a month plan that gives you 24/7 access to your “home” gym location. The other is a $21.99 a month plan that gives you access to gyms across the U.S. (and Puerto Rico, Canada, Panama and the Dominican Republic) as well as other features like tanning beds and massage chairs.
With over 1,500 locations — and growing — Planet Fitness has a strong revenue model with a straightforward business plan. That simplicity has helped PLNT stock 33% year to date, with plenty more to come.
Dunkin Brands (DKNK)
Dunkin Brands (NASDAQ:DNKN) operates Dunkin Donuts shops and Baskin-Robbins stores. Started in Massachusetts back in 1950, it was reorganized in 2005.
But there’s one thing that hasn’t changed with Dunkin — the love of this chain in New England is about as passionate as their love of their football team the New England Patriots.
As a matter of fact, the company will be rebranded simply Dunkin in coming quarters to reflect the name it goes by in New England.
But DNKN is far bigger than its Yankee community. It has more than 12,000 restaurants in 36 countries and sells its branded products in grocery stores as well.
It’s up 11% year to date, but a growing menu and new beverages promise that a new growth leg is in the making.
AMC Entertainment (AMC)
AMC Entertainment (NYSE:AMC) was initially founded in 1920 and it’s now the largest movie theater chain in the world. It has more than 8,200 screens and 661 theaters in the U.S. and 2,200 screens at 244 theaters in Europe.
In 1963, AMC pioneered the multi-screen movie theater. It has continued to be a trend-setter in the industry.
Recently, the home entertainment sector has been a challenge, as well as the stagnant economy. But movie theaters are doing better as many have transitioned their business to their new audiences’ expectations. And as consumer spending grows, heading out to the theater remains a treat for the Gen Z crowd to baby boomers.
Up 18% year to date and delivering an impressive 4.5% dividend, a significant investment by private equity firm Silver Lake earlier this year should help fuel AMC’s growth.
— Louis Navellier
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Source: Investor Place