Apple Inc. (AAPL), Macy’s, Inc. (M) & Whole Foods Market, Inc. (WFM): Buy Where Consumers are Spending

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In a negative economic sign, consumer spending fell in April. However, there are still some places where consumers have been happily spending their money. As consumers pull back, look at Apple Inc. (NASDAQ:AAPL), Macy’s, Inc. (NYSE:M), and Whole Foods Market, Inc. (NASDAQ:WFM) for sales growth.

Apple Inc. (AAPL)

An uneven economy

The U.S. economy has been treading an uneven path since the deep 2007 to 2009 recession. Consumer spending is a big part of the economy. In April it fell into negative territory. And March was revised lower, though it remained positive. There are factors like a strengthening housing market that suggest consumers will be back soon. However, there are other factors, like stagnant wages, that suggest the opposite.

History shows that U.S. consumers will eventually come back to the stores. However, in a choppy sales environment, investors should be looking for companies that offer products and services that consumers are willing to spend on.

High tech toys

While investors have justifiable concerns about Apple Inc. (NASDAQ:AAPL)’s future, customers continue to flock to the company’s stores and products. The tech giant’s list of hit products is impressive, including the iPhone and iPad, and still resonates with customers. The products remain at the vanguard of the tech industry.

It’s true that Apple Inc. (NASDAQ:AAPL) sells into largely mature markets and will be hard pressed to find the next industry-altering gadget. But the tech toys it sells have started to morph into necessities. While much has changed over the past year, including the deep pull back in the shares, the initiation of a dividend, debt sales, and stock buybacks, sales have continued higher.

For example, despite any negatives, year-over-year quarterly sales have been higher in each of the last four quarters. Moreover, annual sales have advanced each year for the past decade, including right through the recession.

Customers clearly like Apple Inc. (NASDAQ:AAPL) products. If retail sales slow down, Apple’s sales may be hit, too. However, based on the company’s sales trends, they aren’t likely to fall off a cliff. With a 2.4% or so dividend yield, growth and income investors should be looking at Apple.

The high end

Macy’s, Inc. (NYSE:M) top line was hard hit by the recession, just like most retailers. However, the company made an important and subtle change to its business. With a focus on higher-end customers, management chose to differentiate the company with customer service. The initiative is called “magic selling.”

Macy’s sales force has been trained to celebrate their customers’ purchases. This is done by engaging with customers and creating a relationship. Basically, the sales staff is making shopping at Macy’s, Inc. (NYSE:M) a more enjoyable experience. Since hitting a low in 2010, sales have been up in each of the last three years. Moreover, the first quarter was the 13th consecutive quarter of 3% or better sales growth.

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