Consumer Confidence Drops the Maximum in 9 Months: 4 Safe Bets

Political uncertainty and disappointing economic data have made markets extremely volatile. The news that the democrats in the U.S. House of Representatives have commenced a formal impeachment inquiry into President Trump has flustered investors since it can deal another blow to the economy.

U.S. consumers are losing confidence in the country’s economic health and the Mid-Atlantic manufacturing activity is slowing down. Thus, although nine of the 11 major S&P 500 sectors have slumped on Tuesday owing to intensifying trade tensions, safe sectors like utility and consumer staples stand out.

Frail Consumer Confidence

Per the Conference Board, the U.S. consumer confidence index plunged from August’s 134.2 to 125.1 in September. In the past nine months, the metric has never seen such a huge drop. Moreover, the index fell short of economists’ consensus estimate, as polled by Reuters, of 133.5. Reportedly, this was the metric’s widest miss against the consensus forecast since 2010.

Most importantly, analysts are not hopeful about an improvement in the confidence index anytime soon.

Soft Mid-Atlantic Manufacturing Activity

According to the Federal Reserve Bank of Richmond, the composite manufacturing index has dropped from 1 in August to a negative 9 in September. The metric also fell short of economists’ consensus estimate of zero, as polled by The Wall Street Journal.

The negative reading signifies the contraction in manufacturing activities across the mid-Atlantic states, backed by the fall in indexes for shipments and backlog of orders. Importantly, employers in the region are increasingly finding it difficult to get workers with essential skill sets. The report added that the indicator for the average workweek for the month of September has touched a nine-year-low mark.

Consumer Staples & Utility Stocks Keep Safe

Despite the prevailing market uncertainty, consumers will continue to purchase essential products that include food and household goods. Hence, consumer staples stocks seem like safe investment bets for investors.

Utility stocks can also be safe bets since there will always be demand for electricity in households. There will also be sustained need for fuels to power airplanes, cars and trains.

We have employed our proprietary stock screener to shortlist potential consumer staples and utility stocks carrying a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Headquartered in Alpine, UT, Purple Innovation Inc PRPL is primarily involved in manufacturing pillows and mattresses. For 2019 and 2020, the #1 Ranked stock is likely to see earnings growth of 445% and 65%, respectively.

WD-40 Company WDFC, headquartered in San Diego, CA, mainly offers homecare and cleaning products. The Zacks #1 Ranked stock is likely to see earnings growth of 10% in the next five years, higher than the industry’s 8.6%. The company has a positive earnings surprise of 3.1% for the past four quarters.

Headquartered in Princeton, NJ, NRG Energy, Inc. NRG is primarily involved in generating electricity. For 2019 and 2020, this Zacks Rank #1 company is likely to see earnings growth of 61.4% and 41%, respectively.

Alliant Energy Corporation LNT, headquartered in Madison, WI, is primarily an energy-services provider. The #2 Ranked stock is expected to report earnings growth of 4.2% and 7.7% for 2019 and 2020, respectively.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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