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5 Top Picks on Increasing Consumer Confidence in June
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On Jun 27, the Conference Board reported that the consumer confidence index increased to 109.7 in the month, marking its highest level since January 2022 and surpassing the consensus estimate of 104. May’s data was also revised upward from 102.3 to 102.5.
The Present Situation Index, which gauges consumers’ views on current market conditions, rose to 155.3 in June from 148.9 in May. The Expectations Index, which is a measure of consumers’ short-term (next six months) outlook on income, business and labor market conditions, surged to 79.3 in June from 71.5 in May.
The Expectations Index has remained below 80 (the level indicates expectations of a recession within a year) since February 2022 excluding last December. However, the data for June showed that the index is just marginally below the threshold of 80 buoyed by a solid month-over-month uplift.
According to Dana Peterson, Chief Economist at The Conference Board, “Assessments of the present situation rose in June on sunnier views of both business and employment conditions. Likewise, expectations for the next six months improved materially, reflecting greater confidence about future business conditions and job availability.”
Importantly, the 12-month forward inflation expectations gauge fell to 6% in June, marking the lowest reading since December 2020. In June, considerably fewer consumers expected a recession for the next 12 months compared to May.
Our Top Picks
We have narrowed our search to five consumer-centric stocks with strong upside potential for the rest of 2023. All these stocks have witnessed robust earnings estimate revisions in the last 30 days, indicating that the market is currently expecting these companies to do good business in 2023. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (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
Chipotle Mexican Grill Inc. (CMG - Free Report) has been benefiting from its strong comparable restaurant sales growth, digital efforts, Chipotlane add-ons and menu innovation. Moreover, strength in digital sales, rise in menu prices, new restaurant openings and higher restaurant-level operating margin have been driving CMG’s performance.
Zacks Rank #2 Chipotle Mexican Grill has an expected revenue and earnings growth rate of 14.2% and 34.2%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last seven days.
Marriott International Inc. (MAR - Free Report) is benefiting from its focus on expansion initiatives, digital innovation, and loyalty program. MAR is also gaining from reopening international borders and leniency in travel restrictions, which have resulted in solid leisure demand along with business and cross-border travel improvements. MAR is consistently trying to expand its worldwide presence and capitalize on the demand for hotels in international markets.
Zacks Rank #2 Marriott International has an expected revenue and earnings growth rate of 13.1% and 25.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last seven days.
Royal Caribbean Cruises Ltd. (RCL - Free Report) has been benefiting from strong close-in bookings at higher prices and continued strength of onboard spending driving load factors. Considering the extension of the WAVE season and solid pent-up demand, RCL raised its 2023 guidance. RCL expects adjusted EPS of $4.40-$4.80, up from the previously stated $3-$3.60.
Zacks Rank #1 Royal Caribbean Cruises has an expected revenue and earnings growth rate of 48.7% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last seven days.
Shake Shack Inc. (SHAK - Free Report) has been benefiting from various digital initiatives, strong same-shack sales and unit expansion efforts. SHAK’s digital retention continues to remain strong. It has also been making more investments in digitization in an effort to sustain its digital guest enhancement strategies in the near term.
Zacks Rank #1 Shake Shack has an expected revenue and earnings growth rate of 21.5% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the last 30 days.
InterContinental Hotels Group plc (IHG - Free Report) owns, manages, franchises, and leases hotels in the Americas, Europe, Asia, the Middle East, Africa, and Greater China. IHG also provides the IHG Rewards loyalty program.
IHG operates hotels under the Six Senses, Regent, InterContinental Hotels & Resorts, Vignette Collection, Kimpton Hotels & Restaurants, Hotel Indigo, EVEN Hotels, HUALUXE, Holiday Inn, Holiday Inn Express, Holiday Inn Club Vacations, avid, Staybridge Suites, Atwell Suites, Candlewood Suites, voco, and Crowne Plaza.
Zacks Rank #2 InterContinental Hotels has an expected revenue and earnings growth rate of 55.7% and 19.9%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 5.5% over the last seven days.
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5 Top Picks on Increasing Consumer Confidence in June
On Jun 27, the Conference Board reported that the consumer confidence index increased to 109.7 in the month, marking its highest level since January 2022 and surpassing the consensus estimate of 104. May’s data was also revised upward from 102.3 to 102.5.
The Present Situation Index, which gauges consumers’ views on current market conditions, rose to 155.3 in June from 148.9 in May. The Expectations Index, which is a measure of consumers’ short-term (next six months) outlook on income, business and labor market conditions, surged to 79.3 in June from 71.5 in May.
The Expectations Index has remained below 80 (the level indicates expectations of a recession within a year) since February 2022 excluding last December. However, the data for June showed that the index is just marginally below the threshold of 80 buoyed by a solid month-over-month uplift.
According to Dana Peterson, Chief Economist at The Conference Board, “Assessments of the present situation rose in June on sunnier views of both business and employment conditions. Likewise, expectations for the next six months improved materially, reflecting greater confidence about future business conditions and job availability.”
Importantly, the 12-month forward inflation expectations gauge fell to 6% in June, marking the lowest reading since December 2020. In June, considerably fewer consumers expected a recession for the next 12 months compared to May.
Our Top Picks
We have narrowed our search to five consumer-centric stocks with strong upside potential for the rest of 2023. All these stocks have witnessed robust earnings estimate revisions in the last 30 days, indicating that the market is currently expecting these companies to do good business in 2023. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (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
Chipotle Mexican Grill Inc. (CMG - Free Report) has been benefiting from its strong comparable restaurant sales growth, digital efforts, Chipotlane add-ons and menu innovation. Moreover, strength in digital sales, rise in menu prices, new restaurant openings and higher restaurant-level operating margin have been driving CMG’s performance.
Zacks Rank #2 Chipotle Mexican Grill has an expected revenue and earnings growth rate of 14.2% and 34.2%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last seven days.
Marriott International Inc. (MAR - Free Report) is benefiting from its focus on expansion initiatives, digital innovation, and loyalty program. MAR is also gaining from reopening international borders and leniency in travel restrictions, which have resulted in solid leisure demand along with business and cross-border travel improvements. MAR is consistently trying to expand its worldwide presence and capitalize on the demand for hotels in international markets.
Zacks Rank #2 Marriott International has an expected revenue and earnings growth rate of 13.1% and 25.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last seven days.
Royal Caribbean Cruises Ltd. (RCL - Free Report) has been benefiting from strong close-in bookings at higher prices and continued strength of onboard spending driving load factors. Considering the extension of the WAVE season and solid pent-up demand, RCL raised its 2023 guidance. RCL expects adjusted EPS of $4.40-$4.80, up from the previously stated $3-$3.60.
Zacks Rank #1 Royal Caribbean Cruises has an expected revenue and earnings growth rate of 48.7% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last seven days.
Shake Shack Inc. (SHAK - Free Report) has been benefiting from various digital initiatives, strong same-shack sales and unit expansion efforts. SHAK’s digital retention continues to remain strong. It has also been making more investments in digitization in an effort to sustain its digital guest enhancement strategies in the near term.
Zacks Rank #1 Shake Shack has an expected revenue and earnings growth rate of 21.5% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the last 30 days.
InterContinental Hotels Group plc (IHG - Free Report) owns, manages, franchises, and leases hotels in the Americas, Europe, Asia, the Middle East, Africa, and Greater China. IHG also provides the IHG Rewards loyalty program.
IHG operates hotels under the Six Senses, Regent, InterContinental Hotels & Resorts, Vignette Collection, Kimpton Hotels & Restaurants, Hotel Indigo, EVEN Hotels, HUALUXE, Holiday Inn, Holiday Inn Express, Holiday Inn Club Vacations, avid, Staybridge Suites, Atwell Suites, Candlewood Suites, voco, and Crowne Plaza.
Zacks Rank #2 InterContinental Hotels has an expected revenue and earnings growth rate of 55.7% and 19.9%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 5.5% over the last seven days.