The Child Tax Credit will boost spending at Walmart, Amazon, Wingstop and other consumer brands

Walmart, Target, Amazon, Wingstop and Nike are some of the names that will benefit when consumers begin receiving the Child Tax Credit this Thursday, according to Cowen.

The Child Tax Credit, which will be paid in monthly installments up to $300 for children under 6 years old and up to $250 for children ages 6 to 17 through the end of the year, will benefit approximately 39 million Americans.

Cowen’s Washington Research Group calls the program an “underappreciated stimulus” that will boost spending across multiple sectors and consumer companies.

Read: Monthly payments of up to $300 per child are starting for most families – and can continue to come for years

Program start times coincide with the start of back-to-school shopping and the end of other COVID related programs.

“The timing of this stimulus is particularly helpful as enhanced unemployment benefits kick in in some states (mostly red) and at the federal level in September,” Cowen wrote.

Walmart Inc.
WMT,
-0.07%

and Target Corp.
TGT,
-0.70%

benefit from their grocery offerings, as well as the wide range of goods they sell. Walmart’s price gap will help the company raise prices as customers become more sensitive to their grocery budgets.

“[W]I hope Walmart will also benefit from child tax credits across other divisions including clothing and hardwear. Walmart is one of the top back-to-school destinations in the US, analysts say, and we expect the child tax credits will only boost its business in the coming months.

“Target’s grocery business performs better during the pandemic as the retailer’s portfolio positions it as a one-stop shop as customers aggregate trips.”

And: Fed’s Beige Book sees a ‘strong’ US economy strengthening, but it’s also struggling with massive shortages and higher inflation

The Child Tax Credit is designed to help families who have difficulty meeting their needs. A Cowen poll shows the use of food stamps grows rapidly in 2020, up 11.4% year-on-year to a penetration of 19.1%.

“The pandemic and high unemployment have increased food insecurity among the US population and are likely to be the driving force behind increased use in 2020,” the report said.

The move to online shopping means that Amazon.com Inc.
AMZN,
-1.59%

have hit a profit, with many of them eligible for the e-commerce giant’s Child Tax Credit for items like toys, clothing, food, and sporting goods.

Most notably, they were highly engaged with Amazon, as they indexed Prime membership, visit rate, and purchase frequency, among other key metrics, the report said. .

EBay Inc.
EBAY,
+ 0.06%

should also get a kick from the program.

Analysts estimate that the Child Tax Credit would benefit the entire restaurant industry. But for the income demographics directly affected by the program – single consumers with a household income of less than $75,000 and married consumers with a household income of less than $150,000 – Wingstop Inc.
SOUP,
+ 0.45%
,
Papa John’s International Inc.
PZZA,
-1.10%

and Jack in the Box Inc.
JACK,
+ 0.14%

is one of the most attainable series.

Also: All the way to the Child Tax Credit is NOT the same as a stimulus check. Number 1: You may have to pay off debt

And with back-to-school and holiday shopping still to come, discount retailers like Burlington Stores Inc.
BURL,
-2.76%

and sports names like Nike Inc.
NKE,
-1.14%

and Dick’s Sporting Goods Inc.
DKS,
-3.75%

favored by Cowen analysts.

“Along with a return to schoolwork and team sports, we believe the setup for this back to school season is the best we can recall over the past few years,” according to the report fox.

“With historically low inventory levels approaching school, this should benefit supplier gross margins as businesses are primarily planning cautiously.”

SPDR Fund for Consumer Discretionary Sector
XLY,
-1.23%

has grown 12.1% this year. SPDR S&P Retail ETF
XRT,
-1.49%

45.8% increase. And the benchmark S&P 500
SPX,
-0.75%

grew 16.1% during the period.

Additional reporting by Victor Reklaitis

https://www.marketwatch.com/story/the-child-tax-credit-will-boost-spending-at-walmart-amazon-wingstop-and-other-consumer-brands-11626291635?rss=1&siteid=rss

Hung

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