9 Stocks for Shock-Weary Investors

Consumer spending represents about two-thirds of economic activity, and is proving to be a source of strength in the face of various uncertainties. Larry Tentarelli, founder of Trend Trading Signals, says in an e-mail quoted by MarketWatch: "When in doubt, the U.S. consumer has stayed resilient recently, and some of the 'everyday' stocks are far away from Trade Wars talk. Many consumer-oriented names, especially in retail and casual dining, have been showing strong price performance versus the overall market." (For more, see also: Top 3 Consumer Cyclical Stocks for 2018.)

'Ride Out the Headlines'

Consumer stocks also are largely removed from the impacts of other international tensions, such as the fighting in Syria, as well as possible tech industry regulation. Among the stocks that Tentarelli likes right now, per MarketWatch, are these five: online dating app Match Group Inc. (MTCH); fast food franchisors Yum! Brands Inc. (YUM) and Domino’s Pizza Inc. (DPZ); and retailers Five Below Inc. (FIVE) and Burlington Stores Inc. (BURL). 

Ari Wald, a technical analyst at Oppenheimer, is "on the lookout for stocks that can ride out the headlines," according to MarketWatch. He says that the retail sector is at its strongest in years. He notes that apparel makers are exerting leadership in the sector, and he particularly likes these four apparel stocks that, per MarketWatch, he believes are headed towards new highs: Lululemon Athletica Inc. (LULU), American Eagle Outfitters Inc. (AEO), Michael Kors Holdings Ltd. (KORS), and Tapestry Inc. (TPR).

Moving Up

All nine stocks are trading at or near their 52-week highs. Their year-to-date gains through April 11 and forward P/E ratios are, per MarketWatch:

• Five Below, +15%, 24x
• Burlington Stores, +11%, 20x
• Match Group, +40%, 28x
• Yum! Brands, +5%, 22x
• Domino's, +22%, 25x
• Lululemon, +16%, 25x
• American Eagle, +14%, 14x
• Michael Kors, +3%, 14x
• Tapestry, +19%, 18x

MarketWatch uses "median PE on next FY estimate" as their measure of forward P/E ratios. The S&P Retail Select Industry Index (SPSIRE) is down by 0.5% YTD, per S&P Dow Jones Indices.

What They Do

Five Below derives its name from the fact that most merchandise in its stores are priced at $5 or less. It targets a youthful demographic, so a downside may be its constant need to remain trendy. Lululemon is another trendy name, producing athletic clothing for yoga, working out, running and swimming. (For more, see also: Consumer Stocks Bump Techs as Investors' Favorite Sector.)

Burlington Stores are in the discount retailing niche, and thus are theoretically more recession-proof than many rivals. Michael Kors produces fashionable clothing at mid-range prices. Tapestry features luxury accessories and clothing, and formerly was known as Coach. American Eagle produces leisure wear sold through its own network of stores.

Tentarelli likes dating service Match Group partly because it's "part of the routine for many consumers," per MarketWatch. Yum! Brands is the parent of KFC, Pizza Hut and Taco Bell.