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The consumer discretionary sector has flourished in 2023. Year to date, out of the 11 broad sectors of the market’s benchmark — the S&P 500 Index — the Consumer Discretionary Select Sector SPDR (XLY) has climbed 32.2%
This sector is generally recognized as being growth-oriented. Notably, growth sectors are highly sensitive to the movement of the market interest rate and are inversely related. We expect this trend to continue for the rest of 2023 as the ongoing quarter is characterized as the holiday season.
The consumer discretionary sector comprises businesses that sell goods and services that are considered non-essential by consumers. These are the products that consumers can avoid without any major consequences to their well-being. In fact, these goods are desirable only if the available income of an individual is sufficient to purchase them.
The fundamentals of the U.S. economy remain strong. The GDP grew at an astonishing 5.1% in third-quarter 2023. Consumer spending remains solid, and the inflation rate has been gradually declining since June 2022.
Our Top Picks
We have narrowed our search to five consumer discretionary stocks that have strong growth potential for December. These stocks have seen positive earnings estimate revision in the past 60 days. 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 in the past three months.
Image Source: Zacks Investment Research
Live Nation Entertainment Inc. (LYV - Free Report) is benefiting from pent-up demand for live events, robust ticket sales and the sponsorship and advertising business. LYV remains optimistic about its growth prospects in 2023.
For concerts, LYV stated that it has already sold more than 117 million tickets (as of June 2023), up 20% from the 2022 levels. In terms of tickets, LYV is likely to benefit from the market pricing trend. Also, the emphasis on new client and venue additions bodes well.
Zacks Rank #1 Live Nation Entertainment has an expected revenue and earnings growth rate of 28.6% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 19.2% over the past 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 58.3% and 30.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the past 60 days.
Royal Caribbean Cruises Ltd. (RCL - Free Report) has been benefiting from solid demand for cruising and acceleration in booking volumes. RCL’s emphasis on strong pricing (on closer-in-demand) bodes well.
In the third quarter, RCL reported accelerating demand for 2024 sailings. RCL intends to focus on new innovative ships and onboard experiences to boost its offering and deliver superior yields and margins.
Zacks Rank #1 Royal Caribbean Cruises has an expected revenue and earnings growth rate of 57.7% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2% over the past 30 days.
NIKE Inc. (NKE - Free Report) displayed strength over the past year. Continued progress on Consumer Direct Acceleration strategy, compelling product innovation and digital leadership have been drivers of growth. This aided NKE’s retail sales across Nike Direct and wholesale businesses in first-quarter fiscal 2024.
NKE’s digital business has been gaining from robust consumer trends, including momentum in the NIKE mobile app led by improved traffic and increased member buying frequency. Backed by solid consumer momentum, a robust innovation pipeline and strong inventory, management provided a solid outlook for fiscal 2024.
Zacks Rank #2 NIKE has an expected revenue and earnings growth rate of 3.8% and 15.8%, respectively, for the current year (ending May 2024). The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the past 60 days.
Warner Music Group Corp. (WMG - Free Report) is a music-based content company. WMG’s operating segment consist Recorded Music and Music Publishing. The Recorded Music segment is involved in the discovery and development of recording artists. The Music Publishing segment owns and acquires rights. WMG operates principally in the United States, the United Kingdom and internationally.
Zacks Rank #2 Warner Music Group has an expected revenue and earnings growth rate of 6% and 23.8%, respectively, for the current year (ending September 2024). The Zacks Consensus Estimate for current-year earnings has improved 6.6% over the past 30 days.
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Top 5 Consumer Discretionary Stocks for December
The consumer discretionary sector has flourished in 2023. Year to date, out of the 11 broad sectors of the market’s benchmark — the S&P 500 Index — the Consumer Discretionary Select Sector SPDR (XLY) has climbed 32.2%
This sector is generally recognized as being growth-oriented. Notably, growth sectors are highly sensitive to the movement of the market interest rate and are inversely related. We expect this trend to continue for the rest of 2023 as the ongoing quarter is characterized as the holiday season.
The consumer discretionary sector comprises businesses that sell goods and services that are considered non-essential by consumers. These are the products that consumers can avoid without any major consequences to their well-being. In fact, these goods are desirable only if the available income of an individual is sufficient to purchase them.
The fundamentals of the U.S. economy remain strong. The GDP grew at an astonishing 5.1% in third-quarter 2023. Consumer spending remains solid, and the inflation rate has been gradually declining since June 2022.
Our Top Picks
We have narrowed our search to five consumer discretionary stocks that have strong growth potential for December. These stocks have seen positive earnings estimate revision in the past 60 days. 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 in the past three months.
Image Source: Zacks Investment Research
Live Nation Entertainment Inc. (LYV - Free Report) is benefiting from pent-up demand for live events, robust ticket sales and the sponsorship and advertising business. LYV remains optimistic about its growth prospects in 2023.
For concerts, LYV stated that it has already sold more than 117 million tickets (as of June 2023), up 20% from the 2022 levels. In terms of tickets, LYV is likely to benefit from the market pricing trend. Also, the emphasis on new client and venue additions bodes well.
Zacks Rank #1 Live Nation Entertainment has an expected revenue and earnings growth rate of 28.6% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 19.2% over the past 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 58.3% and 30.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the past 60 days.
Royal Caribbean Cruises Ltd. (RCL - Free Report) has been benefiting from solid demand for cruising and acceleration in booking volumes. RCL’s emphasis on strong pricing (on closer-in-demand) bodes well.
In the third quarter, RCL reported accelerating demand for 2024 sailings. RCL intends to focus on new innovative ships and onboard experiences to boost its offering and deliver superior yields and margins.
Zacks Rank #1 Royal Caribbean Cruises has an expected revenue and earnings growth rate of 57.7% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2% over the past 30 days.
NIKE Inc. (NKE - Free Report) displayed strength over the past year. Continued progress on Consumer Direct Acceleration strategy, compelling product innovation and digital leadership have been drivers of growth. This aided NKE’s retail sales across Nike Direct and wholesale businesses in first-quarter fiscal 2024.
NKE’s digital business has been gaining from robust consumer trends, including momentum in the NIKE mobile app led by improved traffic and increased member buying frequency. Backed by solid consumer momentum, a robust innovation pipeline and strong inventory, management provided a solid outlook for fiscal 2024.
Zacks Rank #2 NIKE has an expected revenue and earnings growth rate of 3.8% and 15.8%, respectively, for the current year (ending May 2024). The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the past 60 days.
Warner Music Group Corp. (WMG - Free Report) is a music-based content company. WMG’s operating segment consist Recorded Music and Music Publishing. The Recorded Music segment is involved in the discovery and development of recording artists. The Music Publishing segment owns and acquires rights. WMG operates principally in the United States, the United Kingdom and internationally.
Zacks Rank #2 Warner Music Group has an expected revenue and earnings growth rate of 6% and 23.8%, respectively, for the current year (ending September 2024). The Zacks Consensus Estimate for current-year earnings has improved 6.6% over the past 30 days.