While the resurgence of COVID-19 cases is a significant concern for some industries, the consumer discretionary industry continues to enjoy substantial investor attention due to pent-up consumer demand and increasing spending. So, we think it could be wise to scoop up the shares of fundamentally strong consumer discretionary stocks Yum! Brands (NYSE:YUM), Ulta Beauty (NASDAQ:ULTA), LKQ Corporation (NASDAQ:LKQ), and Under Armour (NYSE:UA) (UAA). Let’s discuss.The consumer discretionary industry, which includes apparel retailers and restaurant and hotel operators, has been enjoying investor attention amid the economic recovery period thanks to pent-up demand and rising consumer spending. While the resurgence of the COVID-19 cases due to the rapid spread of the Delta variant continues to worry investors, continued interest in the consumer discretionary industry is evident from the Consumer Discretionary Select Sector SPDR ETF’s (XLY) 5.9% gains over the past three months.
According to the Labor Department, the consumer price index (CPI) in August increased 5.3% from a year earlier and 0.3% from July, which was less than expected, signaling that inflation may be starting to cool. Furthermore, during the Federal Reserve's recent, annual Jackson Hole economic symposium, Fed Chair Jerome Powell reiterated that high inflation is “temporary.” The economy’s management of inflation should boost the performance of the consumer discretionary sector.
So, we think it could be wise to bet on quality consumer discretionary stocks Yum! Brands, Inc. (YUM), Ulta Beauty, Inc. (ULTA), LKQ Corporation (LKQ), and Under Armour, Inc. (UAA).