Wall Street analysts are doubling down on their calls for a pickup in consumer spending.
Barclays, Credit Suisse and Wells Fargo issued ratings Monday underlining their enthusiasm for several consumer stocks, Barclays reaffirming its positive outlook on TJX companies, Credit Suisse improving Tapestry to outperform and Wells Fargo increasing its ratings on select lifestyle companies from high level.
Wells Fargo analysts said they “have never seen the consumer come out so strong from a recession,” pushing McDonald’s, Starbucks, Chipotle, Yum Brands, Darden and Marriott to overweight positions.
Another name could make a comeback in consumer spending, Fairlead Strategies founder and managing partner Katie Stockton told TBEN’s “Trading Nation” on Monday.
“I would love to see a pullback in higher flyers in the consumer discretionary space, names that are in established long-term uptrends and also names that at the end of last year saw turnarounds. in the long run, names like Ford, ”Stockton said, citing a chart of the automaker’s stock.
After a “value-based breakout” in the fourth quarter of 2020, the stock showed “excellent follow-up,” Stockton said.
“It now has positive long-term momentum for the first time since about 2015 and it has reversed that downward trend,” she said. “I would appreciate a step back in those types of names, also travel and recreation and some of the specialty retailers.”
She reported Carnival, Wynn Resorts and Ralph Lauren in addition to Ford.
“I think it really depends on your time horizon,” she says. “In the short term, I actually think we’ll see some outperformance in consumer staples. They don’t tend to be the most exciting position, but in a weaker band, what we have on us with the loss of momentum behind the major indices, we see some early signs of a rotation towards consumer goods. based. “
Wall Street may not even be optimistic enough about what’s to come, said Ari Wald, head of technical analysis at Oppenheimer.
“We like themes that typically outperform in a bull market, which we believe will continue until 2021,” he said in the same interview with “Trading Nation”. “This will include consumer cycles.”
Specialty retail stocks such as TJX companies, Ross stores and Burlington stores are already seeing market participation “broaden,” Wald said, pointing to a chart of TJX.
“The stock broke its pre-Covid peak in the fourth quarter in December. It consolidated there, came back, tested that breakpoint in January. Very often, earlier resistance becomes support. is what happened, “he said. “Now, [it’s] again bending higher. We believe this is a resumption of a very big price breakout and we expect that price to continue to rise. “
TJX stock closed almost 3% higher on Monday.