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Consumer Confidence Hits Highest Level in 25 Months: 5 Picks
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U.S. consumer confidence in the economy and its future outlook jumped in January. On Jan 30, the Conference Board reported that the index of the U.S. consumer confidence for January came in at 114.8, marginally below the consensus estimate of 115. However, the metric was well above the upwardly revised 108 for December.
The index for January was the highest since December 2021, marking the third straight monthly increase. The sub-index for the present-situation index increased to 161.3 in January from 147.2 in the previous month. The sub-index for consumer expectations improved to 83.8 in January from 81.9 in December.
Dana Peterson, chief economist at The Conference Board said, “January’s increase in consumer confidence likely reflected slower inflation, anticipation of lower interest rates ahead, and generally favorable employment conditions as companies continue to hoard labor.”
According to Peterson “The gain was seen across all age groups, but largest for consumers 55 and over. Likewise, confidence improved for all incomes groups except the very top, only households earning $125,000+ saw a slight dip.”
On Jan 19, the University of Michigan reported that the preliminary index of the U.S. consumer sentiment for January came in at 78.8, well above the consensus estimate of 69.7. The final index for December was also 69.7. The index for January was the highest since July 2021.
The sub-index for the current economic condition increased to 83.3 in January from 73.3 in the previous month. The sub-index for consumer expectations increased to 75.9 in January from 67.4 in December.
Our Top Picks
We have narrowed our search to five large-cap consumer-centric stocks that have strong potential for 2024. These stocks have seen positive earnings estimate revisions in the last 60 days. Finally, each of our picks carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks in the past three months.
Image Source: Zacks Investment Research
Netflix Inc. (NFLX - Free Report) added 13.12 million paid subscribers globally in fourth-quarter 2023, with a rise of 1% in average revenue per subscription. NFLX attributed the robust top-line growth to its paid subscription-sharing offering (part of its password-sharing crackdown), recent price changes and the strength of its business in general.
NFLX is expected to continue dominating the streaming space, courtesy of its diversified content portfolio, which is attributable to heavy investments in the production and distribution of localized and foreign-language content.
Netflix has an expected revenue and earnings growth rate of 14.3% and 40.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 5.3% over the last seven days.
Royal Caribbean Cruises Ltd. (RCL - Free Report) has been benefiting from solid demand for cruising and acceleration in booking volumes. Also, the emphasis on strong pricing (on closer-in-demand) bodes well. RCL stated that the momentum has continued into 2024, with booked load factors and rates surpassing those of all previous years.
Given the full fleet resumption and load factors at high prices, RCL expects customer deposits to return to typical seasonality in the upcoming periods. RCL intends to focus on new innovative ships and onboard experiences to boost its offering and deliver superior yields and margins.
Royal Caribbean Cruises has an expected revenue and earnings growth rate of 14.1% and 38%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last seven days.
Stride Inc. (LRN - Free Report) is a premier provider of K-12 education for students, schools and districts, including career learning services through the middle and high school curriculum. For adult learners, LRN delivers professional skills training in healthcare and technology, as well as staffing and talent development. LRN’s technology-based products and services enable clients to attract, enroll, educate, track progress, and support students.
Stride has an expected revenue and earnings growth rate of 10.1% and 45.5%, respectively, for the current year (ending June 2024). The Zacks Consensus Estimate for current-year earnings has improved 8% over the last seven days.
Universal Technical Institute Inc. (UTI - Free Report) provides transportation, skilled trades, and healthcare education programs in the United States. UTI operates in two segments, UTI and Concorde. UTI offers certificate, diploma, or degree programs under various brands, such as Universal Technical Institute, Motorcycle Mechanics Institute, Marine Mechanics Institute, NASCAR Technical Institute, and MIAT College of Technology.
UTI also provides manufacturer-specific advanced training programs, including student-paid electives at its campuses and manufacturer or dealer-sponsored training at various campuses and dedicated training centers. UTI serves students, partners, and communities by providing education and support services in various fields.
Universal Technical Institute has an expected revenue and earnings growth rate of 16.8% and more than 100%, respectively, for the current year (ending September 2024). The Zacks Consensus Estimate for current-year earnings has improved 1.6% over the last 30 days.
Hooker Furnishings Corp. (HOFT - Free Report) is a leading manufacturer and importer of residential furniture, primarily targeted at the upper-medium price range. HOFT offers diversified products, consisting primarily of home offices, entertainment centers, imported occasional, bedroom, and wall systems, across many style categories within this price range.
Hooker Furnishings has an expected revenue and earnings growth rate of 12.2% and 43.5%, respectively, for the current year (ending January 2025). The Zacks Consensus Estimate for current-year earnings has improved 14/9% over the last 60 days.
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Consumer Confidence Hits Highest Level in 25 Months: 5 Picks
U.S. consumer confidence in the economy and its future outlook jumped in January. On Jan 30, the Conference Board reported that the index of the U.S. consumer confidence for January came in at 114.8, marginally below the consensus estimate of 115. However, the metric was well above the upwardly revised 108 for December.
The index for January was the highest since December 2021, marking the third straight monthly increase. The sub-index for the present-situation index increased to 161.3 in January from 147.2 in the previous month. The sub-index for consumer expectations improved to 83.8 in January from 81.9 in December.
Dana Peterson, chief economist at The Conference Board said, “January’s increase in consumer confidence likely reflected slower inflation, anticipation of lower interest rates ahead, and generally favorable employment conditions as companies continue to hoard labor.”
According to Peterson “The gain was seen across all age groups, but largest for consumers 55 and over. Likewise, confidence improved for all incomes groups except the very top, only households earning $125,000+ saw a slight dip.”
On Jan 19, the University of Michigan reported that the preliminary index of the U.S. consumer sentiment for January came in at 78.8, well above the consensus estimate of 69.7. The final index for December was also 69.7. The index for January was the highest since July 2021.
The sub-index for the current economic condition increased to 83.3 in January from 73.3 in the previous month. The sub-index for consumer expectations increased to 75.9 in January from 67.4 in December.
Our Top Picks
We have narrowed our search to five large-cap consumer-centric stocks that have strong potential for 2024. These stocks have seen positive earnings estimate revisions in the last 60 days. Finally, each of our picks carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks in the past three months.
Image Source: Zacks Investment Research
Netflix Inc. (NFLX - Free Report) added 13.12 million paid subscribers globally in fourth-quarter 2023, with a rise of 1% in average revenue per subscription. NFLX attributed the robust top-line growth to its paid subscription-sharing offering (part of its password-sharing crackdown), recent price changes and the strength of its business in general.
NFLX is expected to continue dominating the streaming space, courtesy of its diversified content portfolio, which is attributable to heavy investments in the production and distribution of localized and foreign-language content.
Netflix has an expected revenue and earnings growth rate of 14.3% and 40.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 5.3% over the last seven days.
Royal Caribbean Cruises Ltd. (RCL - Free Report) has been benefiting from solid demand for cruising and acceleration in booking volumes. Also, the emphasis on strong pricing (on closer-in-demand) bodes well. RCL stated that the momentum has continued into 2024, with booked load factors and rates surpassing those of all previous years.
Given the full fleet resumption and load factors at high prices, RCL expects customer deposits to return to typical seasonality in the upcoming periods. RCL intends to focus on new innovative ships and onboard experiences to boost its offering and deliver superior yields and margins.
Royal Caribbean Cruises has an expected revenue and earnings growth rate of 14.1% and 38%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last seven days.
Stride Inc. (LRN - Free Report) is a premier provider of K-12 education for students, schools and districts, including career learning services through the middle and high school curriculum. For adult learners, LRN delivers professional skills training in healthcare and technology, as well as staffing and talent development. LRN’s technology-based products and services enable clients to attract, enroll, educate, track progress, and support students.
Stride has an expected revenue and earnings growth rate of 10.1% and 45.5%, respectively, for the current year (ending June 2024). The Zacks Consensus Estimate for current-year earnings has improved 8% over the last seven days.
Universal Technical Institute Inc. (UTI - Free Report) provides transportation, skilled trades, and healthcare education programs in the United States. UTI operates in two segments, UTI and Concorde. UTI offers certificate, diploma, or degree programs under various brands, such as Universal Technical Institute, Motorcycle Mechanics Institute, Marine Mechanics Institute, NASCAR Technical Institute, and MIAT College of Technology.
UTI also provides manufacturer-specific advanced training programs, including student-paid electives at its campuses and manufacturer or dealer-sponsored training at various campuses and dedicated training centers. UTI serves students, partners, and communities by providing education and support services in various fields.
Universal Technical Institute has an expected revenue and earnings growth rate of 16.8% and more than 100%, respectively, for the current year (ending September 2024). The Zacks Consensus Estimate for current-year earnings has improved 1.6% over the last 30 days.
Hooker Furnishings Corp. (HOFT - Free Report) is a leading manufacturer and importer of residential furniture, primarily targeted at the upper-medium price range. HOFT offers diversified products, consisting primarily of home offices, entertainment centers, imported occasional, bedroom, and wall systems, across many style categories within this price range.
Hooker Furnishings has an expected revenue and earnings growth rate of 12.2% and 43.5%, respectively, for the current year (ending January 2025). The Zacks Consensus Estimate for current-year earnings has improved 14/9% over the last 60 days.