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Quarter-End Insights

Consumer Cyclical Picks for a Choppy Retail Market

Steady U.S. retail spending and rebounding European and Chinese sales offer decent end-market outlooks for consumer cyclical companies, but the larger retail spending environment remains uncertain around the world.

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  • The consumer cyclical sector still looks overvalued on the whole, but several sectors and individual companies offer compelling opportunities.
  • U.S. retail spending continued on a slow but steady trajectory in the early part of the second quarter, but Europe and China are enjoying reaccelerating trends.
  • Weather was a drag on U.S. retailers' sales in the first quarter, and promotional efforts to liquidate inventory could threaten profitability in the short run.

 

Adam Fleck does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.