50 Reasons Why You Should Take The American Consumer Seriously

Power to the people. Specifically, the American consumer.

There’s a simple reason why the June retail sales report dominated the headlines today and that’s because the American consumer has an outsized impact on the economic recovery. In fact, consumer spending accounts for some two-thirds of the U.S. economy.

So many were disappointed to hear that consumers curtailed their spending in June. Retail sales climbed 0.4%, less than half the 0.9% jump economists were expecting. Excluding vehicle and gasoline sales, retail sales actually declined 0.1%, the first such dip in a year. These lukewarm results have prompted some economists to cut their second-quarter GDP growth forecasts.

Does that mean that we should avoid retailer and consumer stocks wholesale? Not by a long shot. What happened in June was a delayed response to 2013 tax increases. Some industries were hit harder than others, most notably home improvement stores, food service and department stores. Meanwhile, a handful of retailers are still flying high.

Last week we received June same-store sales data from 11 of the nation’s top retailers. Excluding drug stores, the group reported a 5.9% rise in sales—above the 4.8% consensus estimate. And the two retail stocks that I have recommended for Blue Chip Growth posted 6% and 7% same-stores growth, also trouncing consensus estimates.

It is clear that while consumers are being careful with where they spend their money, there are still pockets of strength. So as we progress through second-quarter earnings season, I recommend that you screen all of your consumer plays through Portfolio Grader. This week alone, we’re receiving the latest quarterly results from big names like:

  • Credit card players American Express Co. (AXP) and Capital One Financial Corp. (COF).
  • Online retailers eBay Inc. (EBAY) and Overstock.com Inc. (OSTK).
  • Food service companies like Chipotle Mexican Grill Inc. (CMG).
  • Home improvement retailers like Sherwin-Williams Inc. (SHW).

And there’s much more to come in the following weeks. To get ready, here are 50 household names—many of them tied to the American consumer—that have been upgraded and downgraded this weekend. After taking a close look at the latest data on institutional buying pressure and each company’s fundamental health, I decided to revise my Portfolio Grader recommendations for each of the stocks listed below.


Last Week’s Holds, Now Buys

Symbol Company Name Quantitative Grade Fundamental Grade
AMAT Applied Materials Inc. B D
AME Ametek Inc. B B
BBY Best Buy Co. Inc. B C
BCS Barclays PLC ADS B C
EBAY eBay Inc. B C
MUR Murphy Oil Corp. B C
SYT Syngenta AG ADS B B
TYC Tyco International Ltd. B C
WYNN Wynn Resorts Ltd. B B

Last Week’s Sells, Now Holds

Symbol Company Name Quantitative Grade Fundamental Grade
A Agilent Technologies Inc. D C
AMZN Amazon.com Inc. C C
CCL Carnival Corp. D C
CHU China Unicom (Hong Kong) Ltd. ADS D B
DE Deere & Co. D C
EEP Enbridge Energy Partners L.P. Cl A C D
ERIC Ericsson ADR C D
FLR Fluor Corp. D C
HMC Honda Motor Co. Ltd. ADS C D
HOT Starwood Hotels & Resorts Worldwide Inc. D C
INFY Infosys Ltd. ADR D C
KO Coca-Cola Co. D C
PRGO Perrigo Co. D C
SIAL Sigma-Aldrich Corp. D C
TRP TransCanada Corp. D C
WFM Whole Foods Market Inc. D B


Last Week’s Buys, Now Holds

Symbol Company Name Quantitative Grade Fundamental Grade
LLY Eli Lilly & Co. C B
MCK McKesson Corp. B C
PAYX Paychex Inc. C C
PHG Royal Philips NV ADR B D
SBUX Starbucks Corp. C B
TGT Target Corp. C C
WFC Wells Fargo & Co. C B

Last Week’s Holds, Now Sells

Symbol Company Name Quantitative Grade Fundamental Grade
APC Anadarko Petroleum Corp. D C
BEN Franklin Resources Inc. D B
DO Diamond Offshore Drilling Inc. D C
EIX Edison International D B
ESRX Express Scripts Holding Co D B
HAL Halliburton Co. D C
HCN Health Care REIT Inc. C D
KMP Kinder Morgan Energy Partners L.P. D C
NE Noble Corp. D C
UAL United Continental Holdings Inc. D C
VZ Verizon Communications Inc. D C
WMT Wal-Mart Stores Inc. D C
YUM Yum! Brands Inc. D C


Louis Navellier

Louis Navellier

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