Shares of Coca-Cola (KO) are climbing higher after the company topped earnings estimates despite consumer weakness. With other consumer brands yet to report their earnings, Gradient Investments portfolio manager Keith Gangl joins Market Domination to discuss the state of consumer spending and some of his top stock picks amid the current economic backdrop.
“Coke had a good pricing and their mix was 9% up. That’s very good. If you go back last year, all of Coke’s EPS [earnings per share] growth was from pricing, right? Inflation went up. They passed on the price to consumers. Now, the good thing for the consumer side of things is they’re not passing it all on price. They’re also using volumes actually adding as well,” Gangl explains. He notes that high-end consumers are doing well while lower-end consumers struggle.
He is bullish on Amazon (AMZN) as a way to play both the consumer and tech sides of the market. Specifically on the consumer side, he points to Amazon’s investments into capital expenditures (CapEx) that are starting to pay off as margins increase. He also points to McDonald’s (MCD) as a company to watch as its value meals have the ability to draw consumers back in.
As investors await the Federal Reserve’s first interest rate cut, Gangl believes that homebuilders and home improvement retailers like Lowe’s (LOW) and Home Depot (HD) will get a boost. Finally, he points to Costco (COST) as a “consistent compound grower” that has a solid grip on the middle and high-end consumer groups.
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