Consumer Spending May Be Low, but Hedge Funds Love These Retail Stocks

The U.S economy grew by 1% this quarter, up from the previous quarter's 0.4%. All the same, the economy is growing at a worse-than-expected rate. 

According to Bloomberg, "confidence among U.S. consumers dropped in August to the lowest level since November 2008," citing the Thomson Reuters/University of Michigan index of consumer sentiment, which fell to 55.7 this month from 63.7 in July.

Contributing factors to despair and pessimism facing consumers include fears of inflation, loss of confidence in the government's ability to fix the economic slump, unemployment, concerns over the global economy, and market volatility following the downgrade.

But there's always a silver lining, and this time it's a small 0.4% increase in consumer spending. This exceeded analyst expectations of 0.1%. This figure is something to cheer over: Consumer spending represents 70% of the nations GDD, thus any increases spells good news for a staggering economy. Business spending is also up 9.9%, better than the estimated 6.3%.

"While sentiment has deteriorated, data such as industrial production, retail sales and employment suggest the economy could avoid an outright contraction," reports MSNBC.

While it's certain that consumer sentiment is still very low, even one of the lowest levels recorded since 2008, it's also certain that some level of spending will continue.

Below we list retail stocks that have been experiencing significant levels of institutional buying. Big money mangers thing these stocks can manage the downturn -- do you?

Use the list below as a staring-off point in your own analysis. Data sorted by institutional buying as a percentage of share float. (Click here to access free, interactive tools to analyze these ideas.)

1. Tesla Motors (Nasdaq: TSLA  ) : Auto Manufacturers Industry. Market cap of $2.40B. Net institutional purchases over the current quarter at 11.0M, which is 23.08% of the company's 47.65M share float. The stock is a short squeeze candidate, with a short float at 34.35% (equivalent to 13.17 days of average volume). The stock has performed poorly over the last month, losing 16.39%.

2. Sanderson Farms (Nasdaq: SAFM  ) : Meat Products Industry. Market cap of $872.76M. Net institutional purchases over the current quarter at 3.0M, which is 18.35% of the company's 16.35M share float. The stock is a short squeeze candidate, with a short float at 28.09% (equivalent to 15.35 days of average volume). It's been a rough couple of days for the stock, losing 6.23% over the last week.

3. Visteon (NYSE: VC  ) : Auto Parts Industry. Market cap of $2.39B. Net institutional purchases over the current quarter at 8.8M, which is 17.51% of the company's 50.25M share float. The stock is currently stuck in a downtrend, trading -6.78% below its SMA20, -21.11% below its SMA50, and -26.72% below its SMA200. The stock has performed poorly over the last month, losing 28.64%.

4. The Hain Celestial Group (Nasdaq: HAIN  ) : Processed & Packaged Goods Industry. Market cap of $1.34B. Net institutional purchases over the current quarter at 4.8M, which is 14.68% of the company's 32.70M share float. The stock is a short squeeze candidate, with a short float at 5.55% (equivalent to 5.85 days of average volume). The stock has had a couple of great days, gaining 5.18% over the last week.

5. General Motors (NYSE: GM  ) : Auto Manufacturers Industry. Market cap of $33.46B. Net institutional purchases over the current quarter at 104.4M, which is 13.71% of the company's 761.24M share float. The stock is currently stuck in a downtrend, trading -8.9% below its SMA20, -18.67% below its SMA50, and -28.94% below its SMA200. It's been a rough couple of days for the stock, losing 5.51% over the last week.

6. Douglas Dynamics (Nasdaq: PLOW  ) : Auto Parts Industry. Market cap of $294.80M. Net institutional purchases over the current quarter at 2.7M, which is 13.45% of the company's 20.08M share float. The stock has gained 29.47% over the last year.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.


Kapitall's Becca Lipman does not own any of the shares mentioned above.

Motley Fool newsletter services have recommended buying shares of General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1545532, ~/Articles/ArticleHandler.aspx, 10/24/2014 9:48:38 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement