Just as hockey great Wayne Gretzky skates to where the puck will be, investors put their money where profit growth is expected. And according to S&P Global Market Intelligence, profit growth will be in the consumer discretionary sector.

The consumer discretionary exchange-traded fund, Financial Select Sector SPDR ETF (XLF), is up 2% year to date and up 16% from a February low on the back of estimates for 11% earnings growth for the first quarter. Of the 10 sectors S&P Global Market Intelligence tracks, only three show improving earnings. Of those, the consumer discretionary sector’s double-digit jump handily trumps healthcare and telecom’s 3% and 5% respective increases.

Although I don’t specifically screen for stocks by industry, Growth Stock Strategist has in its portfolio three stocks with their fortunes tied to the blooming bank accounts of consumers. Two buy-rated stocks, Express (NYSE: EXPR) and Ethan Allen (NYSE: ETH), have potential to move much higher, while hold-rated Weyco may soon earn itself a buy rating.

The Bureau of Labor issued an upbeat March report noting labor force participation for prime-age workers has moved up to 81% from its low in mid-2015.

Wages continue to grow a steady 2% despite the increase in available jobs. In response to the tightening labor market, retailer Target raised its national minimum wage to $10, its second wage increase in a year,

As Tim Begany so adroitly pointed out in his recent article for Investing Daily’s Profit Catalyst Alert, the recession that so many had feared would pull the rug out from under the economy earlier this year simply failed to appear. The bellwether consumer discretionary ETF was battered earlier this year on recessionary fears, but it has rebounded to be one of the best-performing stock groups in the first quarter.

At Growth Stock Strategist we’re happy to find our consumer discretionary picks benefiting from the dispersion of this disposable income.

Get in the Express Lane

After soaring almost 21% earlier this month, Express has taken a breather and is now up just 4%. Subscribers should take advantage of this temporary sale and load up on a stock that could more than double based on current estimates.

Subscribers will find an in-depth review of Express in this issue. The company is entering its second year of a tremendous turnaround. Earnings are expected to jump 23% in the April quarter. Estimates for slower mid-teens growth for the remainder of the year are likely too low. Leaner inventories and continued discipline for markdowns keep boosting Express’s bottom line faster than sales.

Redecorating Homes and Portfolios

Although the decision to buy a new couch is not nearly as spontaneous as the one to buy an Express sweater, more money in the bank gives consumers the financial cushion to spend more lavishly on their homes.

Earlier this week the company beat estimates by 13%. Revenue grew 10%, the highest rate since 2011 and earnings exploded 88%. While part of the upside was linked to faster delivery of already booked orders, CEO Farooq Kathwari noted that new product is being well received by consumers, and he is bullish about three new lines of furniture to be launched this summer. A partnership with Disney will expand Ethan Allen’s appeal to young families.

Strong cash flow allowed Ethan Allen to pay off $11 million in debt, bringing the balance down 40% from last year’s level. Also, estimates for just 21% earnings growth for the fourth quarter (ending June) and only 11% growth for next fiscal year look too conservative.

Ethan Allen’s stock is up roughly 5% since recommendation, but could move another 30% to our $43 target.

Weather Woes

Weyco Group is currently rated hold. Its earnings were hit in the fourth quarter due to a hiccup in sales of its Bogs boots. After increasing 20% for the first nine months of the year, sales of these colorful foul-weather boots dropped 20% in the critical December quarter.

Management blamed the drop in re-orders on mild weather. If that is indeed the culprit, Bogs’ sales should stabilize and even improve in the first quarter. In the meantime, its traditional men’s shoe line, Stacy Adams, accounts for 13% of annual sales and is in the midst of a turnaround. Sales of these high-end loafers and dress shoes jumped 10% last year.

Weyco is a well-managed company with lean operating expenses.

An improvement in sales, which would jumpstart earnings growth, could inspire me to move this stock up to a buy.

It currently trades at 15 times 2018 estimates, a pricey valuation for a stock growing earnings only 7%.

Be a Choosy Investor

I am not surprised that consumer discretionary stocks have been one of the better-performing sectors. Over the past few months, while I screened for Growth Stock Strategist ideas, retail names were popping up like dandelions in spring.

Unfortunately, most of these stocks are too expensive to justify buying. Smart investors, like smart consumers, should not buy without regard to value.

The cascade of first-quarter earnings announcements over the next few weeks will let me know if growth is accelerating enough to rationalize current prices.

When I find that perfect bargain, you’ll be the first to know.