Sales at U.S. retailers increased for the third successive month in June. Per the Commerce Department, spending at retail outlets rose 0.2% last month from May, way better than March and February’s negative readings.

Retail sales, excluding sales of cars and sales at gas stations, inched up 0.3% in June from May. Overall retail sales rose 1.5% year over year in June.

Retail sales were broad-based, with car dealers, furniture and electric stores, and clothing stores, to name a few, witnessing gains in June. In reality, retail sales inched forward last month as Americans opened up their wallets despite higher interest rates and concerns about an impending economic slump.

Consumers’ willingness to spend improved largely due to a healthy labor market, a rise in wages, and savings that they had amassed during the coronavirus pandemic. Price pressures have also eased at the moment, which bolstered consumer outlays.

Nonfarm payroll jobs have been added to the economy at a steady clip for quite some time now. Now, job additions in June may have been less than in May, but it’s still more than analysts’ estimate. The jobless rate, in the meantime, continues to hover below the 4%-mark, while average hourly earnings improved last month.

In June, the annual rate of inflation declined to its lowest level in more than two years. Prices of indispensable goods and services dropped for the 12th month in a row in June. In this day and age, price pressures have more than halved from the 40-year high it hit last year.

What’s more, consumers are pretty confident about their welfare and are financially secure. For July, the preliminary reading of the University of Michigan’s consumer sentiment index came in at 72.6, way more than June’s reading of 64.4. The sentiment index has now touched its highest level since September 2021.

Consumers’ views on the present economic situation and future expectations also improved, a tell-tale sign that they are poised to spend further soon. Now, with consumer spending remaining resilient and household outlays set to improve, consumer discretionary stocks stand to gain. Needless to say, consumer spending plays a pivotal role in determining their revenues.

Stocks to Gain

We have, thus, selected three consumer discretionary stocks such as GIII Apparel Group GIII, Carnival CCL, and MGM Resorts International MGM that flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).

Such 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. You can see the complete list of today’s Zacks #1 Rank stocks here.

GIII Apparel Group is a manufacturer, designer and distributor of apparel and accessories. GIII Apparel has a Zacks Rank #1 and a VGM Score of A.

The Zacks Consensus Estimate for GIII’s current-year earnings has moved up 9.6% over the past 60 days. The company’s expected earnings growth rate for the next year is 7%.

Carnival operates as a cruise and vacation company. Carnival has a Zacks Rank #2 and a VGM Score of A.

The Zacks Consensus Estimate for CCL’s current-year earnings has moved up 44.8% over the past 60 days. The company’s expected earnings growth rate for the current year is 96.6%.

MGM Resorts International is a holding company and primarily owns and operates casino resorts through wholly owned subsidiaries. MGM Resorts has a Zacks Rank #1 and a VGM Score of B.

The Zacks Consensus Estimate for MGM’s current-year earnings has moved up 1.6% over the past 60 days. The company’s expected earnings growth rate for the next year is 20.8%.

Shares of GIII Apparel, Carnival and MGM Resorts International have gained 49.2%, 126.4%, and 48.8%, respectively, so far this year.

Carnival Corporation (CCL): Free Stock Analysis Report

MGM Resorts International (MGM): Free Stock Analysis Report

G-III Apparel Group, LTD. (GIII): Free Stock Analysis Report

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