Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Target Corporation (TGT), Polaris Industries Inc. (PII), American Express Company (AXP): 3 Reasons to Eye Consumer Goods

Target Corporation (NYSE:TGT)In May, the Bureau of Economic Analysis published its Personal Income and Outlays Report. According to its report, consumer spending increased 0.1% from the previous month. Albeit small, the increase solidifies the notion that the consumer goods sector is hot right now.

For companies related to consumer goods, such as Target Corporation (NYSE:TGT) and Polaris Industries Inc. (NYSE:PII), the uptick in consumer spending is a wonderful sign. The rise also benefits credit service companies like American Express Company (NYSE:AXP), because more spending means that more consumers will purchase via credit card.

And of course it never hurts that the growing number of online sales are almost exclusively through credit card. Also, with a swipe fee of 2.7%, 1.35% higher than competitors, American Express Company (NYSE:AXP) pulls in more revenue per swipe. Of course there’s more good news to add to the consumer spending story – here’s what you need to know.

Increased spending

The most recent consumer spending data published by Gallup shows that spending remained mildly positive in April. Upper-income Americans spent an average of $140 per day while lower-income Americans spent an average of $72 per day. Naturally, the affluent spend more, especially on recreation.

Polaris Industries Inc. (NYSE:PII) has long been the provider of recreational vehicles for the wealthy. During the past 10 years, Polaris Industries Inc. (NYSE:PII) returned 1,000% more than the S&P 500. The company’s popularity even attracted the government as a customer. The D.O.D. now allows Polaris Industries Inc. (NYSE:PII) to compete for defense contracts, which will help the company achieve its goal of one day earning $200 million in revenue from its defense business.

Increased confidence

Thomson Reuters reported that consumer sentiment was at a six-year high in the first quarter of 2013. And Bankrate’s Financial Security Index shows that American’s have remained financially confident.

The more confidence consumers possess, the more they’re likely to whip out their wallets and swipe their cards. Take for instance American Express Company (NYSE:AXP). Driven by confident consumers, and a “swipe fee” that is twice as high as Visa and MasterCard, the company’s share price has climbed 30% in 2013. Although a great long-term investment, I’m eyeing support around $68 before considering going long.

Long-term investment

Personal consumption expenditure (consumer spending) is vital to economic growth. In the U.S., consumer spending equals about 71% of GDP, roughly $11 trillion. As such a large (and growing) percentage of the United States’ gross domestic product, it’s no wonder why this sector is so profitable.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.