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5 Top Consumer Discretionary Stocks to Buy on Easing Inflation
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Fed Chair Jerome Powell lately said that the Federal Reserve may shortly be compelled to increase interest rates aggressively due to an unexpectedly strong January jobs report. Notably, the U.S. economy added 517,000 jobs last month, crushing analysts’ expectations of an increase of 187,000. Also, the unemployment rate dropped to 3.4%, an almost 54-year low.
But Powell did acknowledge that he does expect “significant declines” in prices of essential goods and services in the United States this year. He added that the disinflationary process has already started in the goods sector. By the way, broader inflationary pressure has already started to ease mostly due to the fall in energy and food prices.
The producer price index (PPI) increased by 6.2% in December, but that’s less than the 7.3% increase in November, per the Labor Department. In 2021, the PPI registered an annual jump of 10%. Meanwhile, the PPI decreased by 0.5% in December, its biggest month-over-month decline since April 2020. However, it’s just not wholesale price pressures that are lessening, U.S. consumer prices have also begun to ebb after hitting a four-decade high last summer.
The consumer price index (CPI) increased by 6.5% on an annual basis in December, less than November’s annual increase of 7.1%. It’s also the smallest 12-month advance since October 2021, per the U.S. Bureau of Labor Statistics. And month-over-month, the CPI declined by 0.1% in December, its first drop since the beginning of the coronavirus pandemic.
Additionally, the Fed’s preferred inflation gauge, the personal consumption expenditures index (PCE), too increased at a slower pace in December, a tell-tale sign that the central bank is progressing in its battle to tame inflation. What’s more, the core PCE that doesn’t include volatile energy categories advanced by 4.4% annually in December, less than November’s annual rate of 4.7%. The core PCE currently stands at its lowest level since October 2021.
Now, with inflation showing signs of cooling down amid a strong labor market, consumers are in a better position to spend more on nonobligatory items, which is undoubtedly a boon for consumer discretionary companies. Henceforth, from an investment perspective, we have highlighted five consumer discretionary stocks that are most likely to take advantage of less inflationary pressure. These stocks carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Deckers Outdoor (DECK - Free Report) is a leading designer, producer, and brand manager of innovative, niche footwear and accessories. Currently, Deckers Outdoor has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 1.9% over the past 60 days. DECK’s expected earnings growth rate for the current year is 13.5%.
Las Vegas Sands (LVS - Free Report) is a leading international developer of multi-use integrated resorts primarily operating in the United States and Asia. At present, Las Vegas Sands has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved up 31.8% over the past 60 days. LVS’ expected earnings growth rate for the current year is 217.5%.
OneSpaWorld (OSW - Free Report) is a provider and innovator in the fields of wellness, beauty, rejuvenation, and transformation on cruise ships and on land. Currently, OneSpaWorld has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved up 38.9% over the past 60 days. OSW’s expected earnings growth rate for the current year is 155.6%.
Madison Square Garden Entertainment (MSGE - Free Report) provides entertainment experiences. At present, Madison Square Garden Entertainment has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 30.7% over the past 60 days. MSGE’s expected earnings growth rate for the current year is 65.6%.
American Woodmark (AMWD - Free Report) is the third-largest manufacturer of kitchen and bath cabinets. Currently, American Woodmark has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 0.3% over the past 60 days. AMWD’s expected earnings growth rate for the current year is 109.7%.
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5 Top Consumer Discretionary Stocks to Buy on Easing Inflation
Fed Chair Jerome Powell lately said that the Federal Reserve may shortly be compelled to increase interest rates aggressively due to an unexpectedly strong January jobs report. Notably, the U.S. economy added 517,000 jobs last month, crushing analysts’ expectations of an increase of 187,000. Also, the unemployment rate dropped to 3.4%, an almost 54-year low.
But Powell did acknowledge that he does expect “significant declines” in prices of essential goods and services in the United States this year. He added that the disinflationary process has already started in the goods sector. By the way, broader inflationary pressure has already started to ease mostly due to the fall in energy and food prices.
The producer price index (PPI) increased by 6.2% in December, but that’s less than the 7.3% increase in November, per the Labor Department. In 2021, the PPI registered an annual jump of 10%. Meanwhile, the PPI decreased by 0.5% in December, its biggest month-over-month decline since April 2020. However, it’s just not wholesale price pressures that are lessening, U.S. consumer prices have also begun to ebb after hitting a four-decade high last summer.
The consumer price index (CPI) increased by 6.5% on an annual basis in December, less than November’s annual increase of 7.1%. It’s also the smallest 12-month advance since October 2021, per the U.S. Bureau of Labor Statistics. And month-over-month, the CPI declined by 0.1% in December, its first drop since the beginning of the coronavirus pandemic.
Additionally, the Fed’s preferred inflation gauge, the personal consumption expenditures index (PCE), too increased at a slower pace in December, a tell-tale sign that the central bank is progressing in its battle to tame inflation. What’s more, the core PCE that doesn’t include volatile energy categories advanced by 4.4% annually in December, less than November’s annual rate of 4.7%. The core PCE currently stands at its lowest level since October 2021.
Now, with inflation showing signs of cooling down amid a strong labor market, consumers are in a better position to spend more on nonobligatory items, which is undoubtedly a boon for consumer discretionary companies. Henceforth, from an investment perspective, we have highlighted five consumer discretionary stocks that are most likely to take advantage of less inflationary pressure. These stocks carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Deckers Outdoor (DECK - Free Report) is a leading designer, producer, and brand manager of innovative, niche footwear and accessories. Currently, Deckers Outdoor has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 1.9% over the past 60 days. DECK’s expected earnings growth rate for the current year is 13.5%.
Las Vegas Sands (LVS - Free Report) is a leading international developer of multi-use integrated resorts primarily operating in the United States and Asia. At present, Las Vegas Sands has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved up 31.8% over the past 60 days. LVS’ expected earnings growth rate for the current year is 217.5%.
OneSpaWorld (OSW - Free Report) is a provider and innovator in the fields of wellness, beauty, rejuvenation, and transformation on cruise ships and on land. Currently, OneSpaWorld has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved up 38.9% over the past 60 days. OSW’s expected earnings growth rate for the current year is 155.6%.
Madison Square Garden Entertainment (MSGE - Free Report) provides entertainment experiences. At present, Madison Square Garden Entertainment has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 30.7% over the past 60 days. MSGE’s expected earnings growth rate for the current year is 65.6%.
American Woodmark (AMWD - Free Report) is the third-largest manufacturer of kitchen and bath cabinets. Currently, American Woodmark has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 0.3% over the past 60 days. AMWD’s expected earnings growth rate for the current year is 109.7%.