7 Stocks That Banks Are Gaining In The Wake Of Increased Consumer Spending

7 Stocks That Banks Are Gaining In The Wake Of Increased Consumer Spending

As consumer spending moves, so does the US economy and stock market. In fact, it’s not just personal spending choices that have supported the difficult-to-predict post-pandemic economy. The government continues to spend more than it takes in as well. Unfortunately, this appears to be the nature of the US economy at this point. Things are good when the government and the people spend together. This is what the latest GDP numbers show.

Consumer spending is a strong factor that has allowed the economy to remain strong despite persistent calls for contraction. As a result, investors should consider these companies that are performing extremely well as a result.

Visa (5th)

Many Visa-branded credit cardsSource: Kekinonshi / Shutterstock.com

visa (New York Stock Exchange:Fifth) continues to perform very well as the post-pandemic travel boom has not yet subsided. The post-metric indicates the same result, the V arrow is in a strong position. Consumer appetite for international travel and credit card purchases while abroad remains very strong.

That was the gist of Visas’ third-quarter results released on October 24. Despite the strong performance, V stock moved lower anyway. This movement could be explained by the fact that the market is still forward-looking in nature. A few days later, GDP numbers were released that showed unexpectedly strong growth across the US economy. Shares have trended higher since then.

I think pessimistic critics will now look for reasons to describe the third quarter as unsustainable. I generally agree with that, but I think the desire to travel across borders will not subside. I believe this is a case of a shift in income distribution that supports new spending trends. The middle may be poorer but that may not negatively impact travel in this new economy.

Walmart (WMT)

Walmart (WMT) logo on storefrontSource: Ken Wolter / Shutterstock.com

Walmart (New York Stock Exchange:And die) won’t report earnings for another week but the overall trend of the economy suggests the stock should continue to perform very well. Second quarter earnings were very strong for Walmart. This news helped ease broader concerns because Walmart is a reasonable proxy for the overall U.S. economy.

So, Walmart was already trending in the right direction entering the third quarter. Many companies have already released third-quarter earnings and things are looking good overall. Of course, Q3 GDP also suggests that Walmart will do well next week.

Beyond that, investors already know that CEO Doug McMillon is bullish on Walmart’s direction after he said so in mid-September. I expect Walmart to do very well given that management is generally cautious at Walmart. The fact that the CEO deviated from this pattern early in the third quarter is a strong positive signal for earnings-oriented investors.

LVMH Moet Hennessy Louis Vuitton SE (LVMH)

Louis Vuitton storefront featuring an LV handbag.  LVMUY shares.Source: Vietnam Stock Photos / Shutterstock

LVMH should be Hennessy Louis Vuitton SE (OKMCTS:LVMHF) is an excellent choice for investors looking to benefit from the growth in consumer spending. The stock’s performance depends on its different brands which are divided into companies such as wine, watches, fashion and jewellery.

These so-called homes are collectively performing well leading to overall revenue growth of 14% through the first nine months of 2023.

LVMH Moet Hennessy Louis Vuitton SE management hasn’t offered much color in terms of its assertion that it expects strong growth moving forward. Instead, the company believes it can continue to enhance the desirability of its brands in the future.

I can’t find a good reason to disagree with this idea. It’s clear that there is a global appetite for luxury products that is not slowing down. If the rich do indeed get richer, that bodes well for LVMHF stock.

Furthermore, investors should also note that its shares have a strong upside above their current price.

Hermes International (HESAY)

Picture of a person holding a wallet.Source: Mustache Girl / Shutterstock.com

Hermes International (OKMCTS:He said) is very similar to the LVMH Moet Hennessy Louis Vuitton SE. Very similar target demographic, both sell luxury products and both are doing well at the moment. It’s worth buying given how strong its high-income consumer base is. For investors considering Hermes or LVMH, choose LVMH because Hermes has less upside. But I still think both are still worth buying if you have the money.

Revenue grew by 17% during the first nine months of 2023 and by 16% in the third quarter. One of the few problems facing Hermes is that it is suffering due to the overall strength of the euro. Global sales must be returned to its headquarters in France. The strength of the euro makes those increases in sales less noticeable due to the exchange rate.

American Express (AXP)

An American Express (AXP) credit card comes out of someone's pocketSource: shutterstock

American Express (New York Stock Exchange:XP) continues to positively surprise. It’s been a few weeks since the credit card company that caters to high-income consumers reported earnings. However, it is worth examining its performance and investing in the stock.

Perhaps unsurprisingly, the company performed well in light of the GDP numbers later released. However, the company has performed exceptionally well. EPS came in at $3.30, but Wall Street was expecting $2.95 per share. Revenue rose 13% and American Express reported its sixth consecutive quarter of record revenue.

These results are a strong testament to the idea that the American consumer remains particularly resilient. One of the strongest reasons to continue to believe in AXP and its shares is that skew rates remain below pre-pandemic levels. If its customers are hurting, it’s not reflected in American Express’ financials at this point. That’s a good enough reason to continue believing in AXP at this point.

McDonald’s (MCD)

McDonald's restaurant in Thailand.Source: Tama2u / shutterstock

McDonald’s (New York Stock Exchange:MCD) is always worth researching for investors. Whether it’s consumer spending, dividends, or major corporations, McDonald’s often finds its way onto shopping lists.

During weak economies, McDonald’s does well as diners look for cheaper meals. Conversely, McDonald’s appears to perform well in all other economic conditions. This has not changed as McDonald’s continues to deliver to-go orders. EPS numbers came in at $3.19 during the most recent quarter, which was higher than the $3 Wall Street was expecting.

Global sales growth slightly exceeded domestic sales growth, reaching 8.8%. The company’s stores in Asia performed better, growing by more than 10% during the period.

McDonald’s has seen a decline in traffic among low-income customers but that doesn’t seem to be negatively reflected in its results. Overall, MCD stock will continue to be a winner. Its restaurants are spread everywhere globally and the company continues to find ways to outperform in the long term.

Procter & Gamble (PG)

Procter & Gamble Union Distribution Center.  P&G is an American multinational consumer goods companySource: Jonathan Weiss / Shutterstock.com

Procter & Gamble Company (New York Stock Exchange:s) creates a bank where consumer elasticity remains unexpectedly strong. That’s the message the company sent when it announced its earnings a few weeks ago.

Sales rose 6% to $21.9 billion and profits rose 17%. Consumers continue to spend on staples made by Procter & Gamble. This is somewhat surprising given that P&G’s products are priced higher than its off-brand competitors, and analysts were concerned that consumers would trade them up. However, not only did consumers not back down, they continued to buy P&G products even as the company continued to raise prices again and again.

The company is expected to return to a volume strategy in the future but I suspect they will maintain prices at current levels by doing so. Consumers continue to indicate that they are willing to pay increased prices for brands they know. P&G may enter a new model of high-volume sales at high prices in the near future. It appears that the consumer is willing to let him invest in PG stock to benefit from it.

On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com Publication guidelines.

Alex Sirois is an independent contributor to InvestorPlace whose approach to personal stock investing focuses on long-term stock picks, buy-and-hold, and wealth-building. Having worked in many industries from e-commerce to translation to education and utilizing an MBA from George Washington University, he brings a diverse set of skills with which to refine his writing.

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