Don't Worry About the American Consumer

 | Nov 06, 2012 | 12:30 PM EST
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The headline on a recent issue of my local New Mexico business newspaper reads: "Fiscal cliff won't steal Christmas," with the subheading, "Retailers predict holiday sales gains." These headlines caught my eye during my morning puttering today, as I mulled the question of how the election -- and other issues, such as the fiscal cliff -- will affect various stocks and sectors.

Of course, there are all the obvious and much-covered prognostications. Coal companies will benefit if Governor Romney wins. Dividend payers will be hurt if Obama is reelected.

At this point, there's not much to add to those views. But that headline about New Mexico holiday retail forecasts has been sticking with me. Here's why: Regardless of politics, life goes on, and we as Americans have proven our strong penchant for shopping.

Since 2008, various subsectors of the consumer-discretionary group have been in the ranks of top fundamental and technical performers. Back then, I was doing stock-analysis videos and radio for Investor's Business Daily. Shortly after that year's election, and before President Obama took office, several consumer-related names popped onto my scans of stocks, showing early leadership.

Remember, this was before the market went into rally mode in March of 2009. In late November and early December, I was picking up bullish signals on the charts of Green Mountain Coffee Roasters (GMCR), AutoZone (AZO) and Chipotle Mexican Grill (CMG). Over the following next couple of years, those stocks were among those doing stints as top price leaders. Other notable gainers during that time included Lululemon Athletica (LULU), Ulta Salons (ULTA) and Panera Bread (PNRA).

So how does this trip down memory lane apply to today's election? Here is my Election Day investing thesis: Regardless of whether Obama or Romney emerges as the winner, Americans will continue spending money on clothes, consumer goodies, gadgets and restaurants. Somebody beamed down here from another planet might have a hard time reconciling the poor job numbers of the past few years and the stunning sales figures for iPads and smartphones running Apple (AAPL) and Google (GOOG) Android operating systems.

We Americans won't stop liking our stuff and our leisure goods.

Now, it's true that various subsectors of retail have cycled in and out of leadership over the past four years, and I fully expect that to happen again. One example is the above-mentioned AutoZone. It and fellow auto-parts retailers, such as O'Reilly (ORLY) and Advance Auto Parts (AAP), were beneficiaries of the poor economy as consumers patched up the cars they already owned, rather than replacing them.

Discount retailers such as Family Dollar (FDO) and Dollar Tree (DLTR) also benefited from consumers who were tightening their belts in the recession.

On the other end of the spectrum, luxury retailers like Coach (COH) have also had their day in the sun. It was also during the Obama presidency that fellow luxury purveyor Michael Kors (KORS) went public and became a big growth winner.

So, whatever the result of Tuesday's vote -- and whenever we learn what those results are, in the event of a close and contested race -- here is my prediction. Various subsectors of consumer discretionary will emerge as winners over the coming weeks and months.

As I write this, television and online retailer HSN (HSNI) is showing leadership after last week's earnings news. I am not predicting anything with regard to this particular stock, but just pointing out another consumer discretionary name in favor at the moment.

Also of note: Here in New Mexico, there's a new Five Guys burger joint opening in my town. Sports Authority is going into an old Mervyns location up the street. Most exciting to me, Ulta is opening a location near my home.

Yes, we will keep buying our stuff, regardless of who lives at 1600 Pennsylvania Avenue.



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