We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
U.S. Consumer Sentiment Tumbles in May: 5 Safe Stocks to Buy
Read MoreHide Full Article
On May 12, the University of Michigan reported that U.S. consumer sentiment fell to a six-month low in its preliminary reading for May. The metric fell from April’s final reading of 63.5 to 57.7, marking its lowest since November 2022. The consensus estimate was 63.
The present situation sub-index, which measures the consumer’s thinking about their current financial situation, dropped to 64.5 in May from 68.2 in April. The expectation sub-index, which measures consumer’s expectations for the next six months, declined to 53.4 in May from 60.5 in April.
Consumer’s expectations for near-term inflation declined marginally in May to 4.5% after climbing to 4.6% in April from 3.6% in March. However, inflation expectations over the next five years rose to 3.2% from 3% in April, reflecting its highest reading since 2011. The report said that “Consumers’ worries about the economy escalated in May alongside the proliferation of negative news about the economy, including the debt crisis standoff.”
A significant drop in consumer sentiment is awful for the U.S. economy. Weak sentiment may result in a contraction in consumer spending going forward. However, consumer spending is the biggest driver of the U.S. economy constituting more than 2/3 of the GDP. Low consumer spending may lead to a recession.
At this stage, it will be prudent to invest in defensive stocks like consumer staples, utilities, and health care to safeguard one’s portfolio from volatile trading.
Our Top Picks
We have narrowed our search to five consumer staples stocks with strong potential for the rest of 2023. These stocks have seen positive earnings estimate revisions in the last 30 days. Each of our picks sports 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 year to date.
Image Source: Zacks Investment Research
Celsius Holdings Inc. (CELH - Free Report) specializes in commercializing healthier, nutritional functional foods, beverages and dietary supplements. CELH markets Celsius, the calorie burner, through its wholly-owned operating subsidiary, Celsius Inc. CELH sells its products through grocery, drug, convenience, club and mass, and health and fitness channels.
Celsius Holdings has an expected revenue and earnings growth rate of 67.9% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 27.5% over the last seven days.
The Clorox Co. (CLX - Free Report) manufactures and markets consumer and professional products worldwide. CLX benefited from solid demand, cost-saving efforts, strong execution, and pricing actions.
CLX has been on track with its IGNITE strategy and digital investments to transition to a cloud-based platform. Also, continued strength in the international segment bodes well. Fiscal 2023 organic sales are anticipated to be flat to up 3-4%, in sync with our estimate of 1.6% growth.
Clorox has an expected revenue and earnings growth rate of 1.7% and 8.3%, respectively, for the current year (June 2023). The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the last seven days.
Lamb Weston Holdings inc. (LW - Free Report) produces, distributes, and markets value-added frozen potato products worldwide. LW’s top line has been benefiting from robust price/mix, as witnessed during the third quarter of fiscal 2023. The price/mix increased 31%, reflecting gains from pricing actions in the core business segments to counter input, manufacturing and transportation cost inflation.
LW’s ability to counter input cost inflation through pricing actions is likely to remain favorable. It is also building revenue growth management and execution capacity to drive growth. LW’s efforts to boost capacity enable it to meet rising demand conditions for snacks and fries.
Lamb Weston has an expected revenue and earnings growth rate of 29.6% and more than 100%, respectively, for the current year (May 2023). The Zacks Consensus Estimate for current-year earnings has improved 3.4% over the last 30 days.
Coty Inc. (COTY - Free Report) has been benefiting from its focus on six strategic pillars aimed at sustainable growth. These include stabilizing Consumer Beauty brands, strengthening e-commerce and establishing a solid skincare portfolio, among others.
COTY made several strategic partnerships to enhance its brand portfolio. Management raised its like-for-like sales view for fiscal 2023. COTY is committed to saving initiatives, pricing actions and persistent premiumization to counter inflationary headwinds.
Coty has an expected revenue and earnings growth rate of 2.8% and 85.7%, respectively, for the current year (ending June 2023). The Zacks Consensus Estimate for current-year earnings has improved 36.8% over the last seven days.
Inter Parfums Inc. (IPAR - Free Report) is benefiting from strength in its brand portfolio, which continued in the first quarter of 2023. Net sales gained from sales growth across its European and U.S.-based operations. Following the upbeat sales numbers, IPAR recently raised its top-and bottom-line view for 2023.
Inter Parfums has been benefiting from the booming fragrance market globally. In this regard, it is gaining market share with sizable demand for its key brands and new licenses. Management is seeing robust opportunity from the reopening of China, especially for the back half of the year. IPAR has been on track to expand its business through new licenses or buyouts.
Inter Parfums has an expected revenue and earnings growth rate of 15.2% and 7.3%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 6.5% over the last 30 days.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
U.S. Consumer Sentiment Tumbles in May: 5 Safe Stocks to Buy
On May 12, the University of Michigan reported that U.S. consumer sentiment fell to a six-month low in its preliminary reading for May. The metric fell from April’s final reading of 63.5 to 57.7, marking its lowest since November 2022. The consensus estimate was 63.
The present situation sub-index, which measures the consumer’s thinking about their current financial situation, dropped to 64.5 in May from 68.2 in April. The expectation sub-index, which measures consumer’s expectations for the next six months, declined to 53.4 in May from 60.5 in April.
Consumer’s expectations for near-term inflation declined marginally in May to 4.5% after climbing to 4.6% in April from 3.6% in March. However, inflation expectations over the next five years rose to 3.2% from 3% in April, reflecting its highest reading since 2011. The report said that “Consumers’ worries about the economy escalated in May alongside the proliferation of negative news about the economy, including the debt crisis standoff.”
A significant drop in consumer sentiment is awful for the U.S. economy. Weak sentiment may result in a contraction in consumer spending going forward. However, consumer spending is the biggest driver of the U.S. economy constituting more than 2/3 of the GDP. Low consumer spending may lead to a recession.
At this stage, it will be prudent to invest in defensive stocks like consumer staples, utilities, and health care to safeguard one’s portfolio from volatile trading.
Our Top Picks
We have narrowed our search to five consumer staples stocks with strong potential for the rest of 2023. These stocks have seen positive earnings estimate revisions in the last 30 days. Each of our picks sports 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 year to date.
Image Source: Zacks Investment Research
Celsius Holdings Inc. (CELH - Free Report) specializes in commercializing healthier, nutritional functional foods, beverages and dietary supplements. CELH markets Celsius, the calorie burner, through its wholly-owned operating subsidiary, Celsius Inc. CELH sells its products through grocery, drug, convenience, club and mass, and health and fitness channels.
Celsius Holdings has an expected revenue and earnings growth rate of 67.9% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 27.5% over the last seven days.
The Clorox Co. (CLX - Free Report) manufactures and markets consumer and professional products worldwide. CLX benefited from solid demand, cost-saving efforts, strong execution, and pricing actions.
CLX has been on track with its IGNITE strategy and digital investments to transition to a cloud-based platform. Also, continued strength in the international segment bodes well. Fiscal 2023 organic sales are anticipated to be flat to up 3-4%, in sync with our estimate of 1.6% growth.
Clorox has an expected revenue and earnings growth rate of 1.7% and 8.3%, respectively, for the current year (June 2023). The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the last seven days.
Lamb Weston Holdings inc. (LW - Free Report) produces, distributes, and markets value-added frozen potato products worldwide. LW’s top line has been benefiting from robust price/mix, as witnessed during the third quarter of fiscal 2023. The price/mix increased 31%, reflecting gains from pricing actions in the core business segments to counter input, manufacturing and transportation cost inflation.
LW’s ability to counter input cost inflation through pricing actions is likely to remain favorable. It is also building revenue growth management and execution capacity to drive growth. LW’s efforts to boost capacity enable it to meet rising demand conditions for snacks and fries.
Lamb Weston has an expected revenue and earnings growth rate of 29.6% and more than 100%, respectively, for the current year (May 2023). The Zacks Consensus Estimate for current-year earnings has improved 3.4% over the last 30 days.
Coty Inc. (COTY - Free Report) has been benefiting from its focus on six strategic pillars aimed at sustainable growth. These include stabilizing Consumer Beauty brands, strengthening e-commerce and establishing a solid skincare portfolio, among others.
COTY made several strategic partnerships to enhance its brand portfolio. Management raised its like-for-like sales view for fiscal 2023. COTY is committed to saving initiatives, pricing actions and persistent premiumization to counter inflationary headwinds.
Coty has an expected revenue and earnings growth rate of 2.8% and 85.7%, respectively, for the current year (ending June 2023). The Zacks Consensus Estimate for current-year earnings has improved 36.8% over the last seven days.
Inter Parfums Inc. (IPAR - Free Report) is benefiting from strength in its brand portfolio, which continued in the first quarter of 2023. Net sales gained from sales growth across its European and U.S.-based operations. Following the upbeat sales numbers, IPAR recently raised its top-and bottom-line view for 2023.
Inter Parfums has been benefiting from the booming fragrance market globally. In this regard, it is gaining market share with sizable demand for its key brands and new licenses. Management is seeing robust opportunity from the reopening of China, especially for the back half of the year. IPAR has been on track to expand its business through new licenses or buyouts.
Inter Parfums has an expected revenue and earnings growth rate of 15.2% and 7.3%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 6.5% over the last 30 days.