As market corrections seem overdone since the bloodbath at the start of the year, investors may now take a look at some high growth investing areas like the consumer discretionary stocks space and its related ETFs. This is especially true given the three-month high U.S. consumer confidence index for January.

The index rose to 98.1 in January from December’s revised reading of 96.3. The reported score also beat the consensus estimate of an increase of 97.8. A strong job market, rock-bottom energy prices and still-subdued inflation levels have helped to counter for the stock market turbulence so far this year and have boosted consumer confidence.

A benign Fed refrained from raising the interest rate at its January meeting; no more sounds sure about four rate hikes this year and has not even taken the option of negative interest rates ‘off the table’. This has not only restored consumer sentiment, but has also assured market watchers of a few more months of cheap dollar (read: ETF Winners & Losers Post Fed Meet).

Also, a lower dollar and a less harsh winter than the previous few years will give first-quarter 2016 the benefit of easy comparison in terms of economic activities. Upbeat retail sales for January have already given cues of the fact. U.S. retail sales excluding automobiles, gasoline, building materials and food services inched up 0.6% in January versus an unrevised 0.3% decline in December.

The space is also coming up with decent performances in the ongoing earnings season. Total earnings are expected to be up 0.8% on revenue growth of 0.6% for the fourth quarter of 2015. The earnings growth rate is even better than the retail sector which is expected to decline 1.7% (read: Earnings Recession Put These ETFs in Focus).
 
The consumer discretionary sector is likely to pick up with earnings growth rates of 1.4%, 4.7%, 6.2% and 9.6% projected for the upcoming four quarters, starting first-quarter 2016, as per the Zacks Earnings Trend issued on February 10, 2016.
 
Investors should also note that consumer stocks outperform in the early stages of a business cycle. Agreed, talks of a likely recession in the U.S. are doing rounds, but in our opinion, the odds of such a slowdown are minimal.  
 
Given these positive developments, a look at some of the top-ranked ETFs in the space could lead investors to the best ways to target the segment. In order to do this, investors can check the Zacks ETF Rank and find the top-ranked consumer discretionary ETFs best suited for their purpose. We have highlighted three ETFs which were upgraded to a Zacks ETF Rank #1 (Strong Buy) a month ago (read: 2 ETFs That Surged to Rank #1 Braving All Odds).
 
Consumer Discretionary Select Sector SPDR ETF (XLY) 
 
This $9.1-billion ETF looks to track the S&P Consumer Discretionary Select Sector Index. Holding 88 stocks in its portfolio, the fund puts about 25% of assets in Amazon (AMZN), Home Depot (HD) and Walt Disney (DIS). Media (24.8%), Specialty Retail (20.5%), Hotels Restaurants & Leisure 15.01% and Internet & Catalog Retail 14.94% have double-digit exposure in the fund. XLY lost 3.7% in the last one month (as of February 12, 2016) and yields 1.6% annually. The fund charges 14 bps in fees.

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