S&P 500 is wobbling today after Fitch Ratings said consumer spending will slow down in the coming months.
Consumption will be down 3.0% in Q2 of 2024The credit rating agency forecasts a 10 basis points decline in consumption as student loan payments resume in October. It also expects the lagged effect of rate hikes to be more pronounced as labour market cools off and wage growth loses steam.
All in all, Fitch now sees real spending to contract by 0.8% and 3.0% in the first and second quarters of 2024, respectively.
To that end, Anna Glaessgen – a B. Riley analyst recommends investing in Fox Factory Holding Corp as it has a history of outperforming in an economic downturn.
She’s bullish on the Fox Factory stock even though the company came in a bit shy of revenue estimates in its latest reported quarter.
The bull case for Fox Factory stockFox Factory has a huge range of products related to bikes, trucks, and off-road vehicles at large.
She expects the Nasdaq-listed firm to do well in an economic downturn even though its products are usually coupled with a hefty price because they cater primarily to the higher-income enthusiastic consumer.
It’s a bit counterintuitive. But that’s actually the consumer that’s more resilient. And that’s where we’re seeing demand prove most resilient.
The Duluth-headquartered firm saw its sales bottom at an 8.0% year-on-year decline in the financial crisis of 2008 versus down up to 40% for the broader market. That’s what strengthens the case for investing in Fox Factory stock ahead of an economic downturn.
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