Editor’s note: Our consumer discretionary sector outlook is part of a regular series sharing our views on various sectors. It’s part of our efforts to increase communication with investors at a time of economic and market uncertainty. While the sector outlooks provide a short overview of our thinking, we invite you to contact us if you are interested in a deeper discussion.
The S&P 500 consumer discretionary sector hit several all-time highs in recent weeks, and higher valuations are likely warranted. Consider the backdrop: Consumers amassed $4 trillion in savings during the pandemic, household balance sheets are generally strong, the employment picture is starting to improve, stimulus checks are arriving in bank accounts, and credit is readily available. In short, spending should spring forward as COVID restrictions ease.
But valuations reflect many of these positives. This blog looks at some of the bright spots and remaining opportunities Dana sees within the sector, along with a few small pockets that warrant caution.