The U.S. employment numbers are far from uplifting - but U.S. consumer stocks are! They are among the market leaders and continue to reflect positively on the economy.
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While U.S. economic growth has been anemic, at least compared to expectations, the stock market is still benefitting from the monetary fix in place. There are moments of anxiousness when investors get skittish and take profits, but equities are, undoubtedly, the best show in town. The breadth of bullishness remains strong, even with the current corrective phase and the strength of consumer stocks, in particular, defies the general picture of this critical component of the economy. Here investors see not a lost generation of the unemployed, underemployed cocooning in protective mode – instead, they see profits. The Stock Trends S&P 100 Bullish Crossover Portfolio gives us a pretty good idea which U.S. big cap stocks have delivered the most profitable rides for tentative, but patient, investors. Of course, the stock longest held in the portfolio currently is Apple ($AAPL). It’s been in the portfolio almost three years and is currently up 383 per cent since its Bullish Crossover. Impressive, but no surprise there. The more telling observation points to other leading long-term performers in the portfolio - in particular the relative strength of consumer stocks.
Consumer cyclical stocks are among the current stock market leaders - outpacing the broader market by 4 per cent in the past quarter. Although non-cyclical stocks have been lagging over the same period, the group has been good to investors over the past couple of years. Of these, tobacco stocks are golden. Altria Group ($MO) was a S&P 100 Bullish Crossover Portfolio buy in July of 2009 and is now up 93 per cent – closer to a 125 per cent real return with dividends included. With the exception of a sudden sell-off in August of last year, MO has been an exemplar trending stock – the kind of investment that conservative, income-sensitive investors thoroughly appreciate. So is Philip Morris International ($PM), another tobacco company hitting new highs. It’s now up 63 per cent since its Bullish Crossover in September of 2010.
Other consumer stocks that have powered along their uptrend include Kraft Foods ($KFT), Colgate Palmolive ($CL), McDonald’s Corp. ($MCD), and Nike ($NKE). Retailers Costco Wholesale ($COST), Target Corp. ($TGT), Home Depot ($HD), and Lowes Cos. ($LOW) are also showing impressive price trends. Of course, trailblazing shares of Dollar Tree ($DLTR) have been Stock Trends Bullish for over 200 weeks – gaining 182 per cent since the stock's Bullish Crossover in the summer of 2008. Its bullish trend is the longest running among U.S. stocks.
Online retail stocks are doing well, too. The Dow Jones Internet Commerce Index ($DJCOM) is up 13 per cent in the past three months. Amazon ($AMZN) and Ebay ($EBAY) delivered good fiscal results and are attracting investors amply.
Another consumer area that is hot: travel and tourism. The best performing industry group over the past three months, these leisure stocks don’t seem to be hurting in the economic malaise. The Dow Jones U.S. Travel and Tourism index ($DJUSTT) is up 35 per cent since the end of January. Most casino and resort stocks have been outperforming the market this spring, as are many lodging, gaming, sporting and restaurant stocks. None of this speaks of a crippled consumer.
But perhaps all this discretionary spending has a familiar source. Another indicator of these consumer-driven trends is the share price performance of credit card companies –Mastercard ($MA), which is up 84 per cent since its Bullish Crossover, and Visa ($V) are in solid long-term uptrends, while Capital One Financial ($COF) and American Express ($AXP) are among the best performing financial stocks in recent months. In any case, investors are more encouraged about the economy and consumers than the employment numbers would suggest.
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Published in Stock Trends