5 Consumer Stocks Near Fresh Highs Still Worth Buying

When we bet on a stock, we always try to hit the jackpot. But striking the right chord each time needs a fair amount of luck. Nonetheless, the current economic scenario is making it tough for investors to arrive at an investment decision. Global economic headwinds such as yet-to-recover Chinese economy, softness in the Eurozone and fluctuating commodity prices are leaving investors perplexed about which stocks to count on.

How to Identify Stocks?

One could take resort to commonly used techniques to find beaten down stocks that have the potential to recover faster than others. But this brings with it the risk of disappointment. Particularly, one could be stuck in the value trap if the hidden weakness in a selected stock is not identified. So, wouldn’t it be a safer strategy to look for stocks that are winners currently and have the potential to gain further? The new investment mantra is “buy high and sell higher”.

One should primarily look for stocks that have recently been witnessing a price increase. Actually, stocks seeing price strength of late have a high chance of carrying the momentum forward. So, a look at stocks that have already won the game and are capable of setting a new benchmark sounds rational. You can ride on the stock bandwagon hovering close to their 52-week highs and book handsome profits.

Why Consumer Discretionary Stocks?

The U.S. stock market displayed a sluggish performance at the start of the year owing to fears of overseas turmoil and plunging oil prices. But since then the market has recouped much of the losses, and consumers feel much better about the economy. The recent rebound in oil prices, increase in consumer spending, and a gradual improvement in the housing market are signals that the economy is on a recovery mode.

GDP advance estimate for the second quarter of 2016 improved at an annual rate of 1.2%, against a 0.8% rise witnessed in the preceding quarter, per the Bureau of Economic Analysis. Consumer spending, which accounts for over two-thirds of U.S. economic activity, increased 4.2% in the second quarter.

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