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American Sentiment on Economy Tops in 30 Months: 5 Picks
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The sentiment of U.S. consumers on the economy and its future outlook have both got a boost in January. 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. Moreover, the index climbed 13.1% month over month, marking its fastest pace of increase since December 2005. 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 November.
Expectations of overall inflation for the next 12 months rose to 2.9% in January, marking the lowest reading since December 2020. The metric declined significantly from its peak of 5.4% in April 2022. Long-run inflation expectations fell to 2.8%, below the 2.9-3.1% range seen for 26 of the last 30 months.
On Dec 20, the Conference Board reported that its consumer confidence index for December came in at 110.7 beating the consensus estimate of 104.5. November’s data was revised downward to 101 from 102 reported earlier.
The sub-index for the present situation climbed to 148.5 in December from 136.5 in November. The sub-index for expectations surged to 85.6 in December from 77.4 in November. This marked the highest level for the expectations index since July.
Our Top Picks
We have narrowed our search to five large-cap (market capital > $10 billion) consumer-centric stocks that have strong potential for 2024. These stocks have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) 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) is benefiting from growing subscriber base thanks to a robust portfolio. Crackdown on password-sharing and the introduction of paid sharing in more than 100 countries, which represents more than 80% of NFLX’s revenue base, is also expected to aid growth.
NFLX’s diversified content portfolio, which is attributable to heavy investments in the production and distribution of localized, foreign-language content, has been driving its growth prospects. We expect 2023 net sales to rise 6.2% from 2022.
Netflix has an expected revenue and earnings growth rate of 14.3% and 32.7%, 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 benefitting 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 13.7% and 38.1%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.9% over the last 60 days.
Carnival Corp. & plc (CCL - Free Report) is benefiting from improved booking trends, courtesy of solid demand, bundled package offerings and increased advertising activities. CCL has secured bookings for nearly two-thirds of its business for 2024, with significantly higher prices. Also, focus on fleet-optimization initiatives bodes well for CCL.
Carnival has an expected revenue and earnings growth rate of 13.6% and 39.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings the has improved 5.4% over the last 30 days.
DraftKings Inc. (DKNG - Free Report) is a digital sports entertainment and gaming company catering to the competitive spirits of sports fans with products that include daily fantasy, regulated gaming, and digital media. DKNG is the only U.S.-based vertically integrated sports betting operator.
DKNG is a multi-channel provider of sports betting and gaming technologies, powering sports and gaming entertainment for 50 operators across more than 15 U.S. and global markets.
DraftKings has an expected revenue and earnings growth rate of 28.4% and 85.1%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4.3% over the last 30 days.
Snap-on Inc. (SNA - Free Report) has been benefiting from continued positive business momentum and contributions from its Value Creation plan. Higher sales volume, pricing actions, lower material and other costs, as well as gains from SNA’s Rapid Continuous Improvement initiatives, have been aiding margin expansion. We expect the gross margin to increase 120 basis points year over year in 2023. SNA is on track with its other cost-reduction initiatives.
Snap-on has an expected revenue and earnings growth rate of 3.3% and 4.3%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 30 days.
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American Sentiment on Economy Tops in 30 Months: 5 Picks
The sentiment of U.S. consumers on the economy and its future outlook have both got a boost in January. 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. Moreover, the index climbed 13.1% month over month, marking its fastest pace of increase since December 2005. 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 November.
Expectations of overall inflation for the next 12 months rose to 2.9% in January, marking the lowest reading since December 2020. The metric declined significantly from its peak of 5.4% in April 2022. Long-run inflation expectations fell to 2.8%, below the 2.9-3.1% range seen for 26 of the last 30 months.
On Dec 20, the Conference Board reported that its consumer confidence index for December came in at 110.7 beating the consensus estimate of 104.5. November’s data was revised downward to 101 from 102 reported earlier.
The sub-index for the present situation climbed to 148.5 in December from 136.5 in November. The sub-index for expectations surged to 85.6 in December from 77.4 in November. This marked the highest level for the expectations index since July.
Our Top Picks
We have narrowed our search to five large-cap (market capital > $10 billion) consumer-centric stocks that have strong potential for 2024. These stocks have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) 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) is benefiting from growing subscriber base thanks to a robust portfolio. Crackdown on password-sharing and the introduction of paid sharing in more than 100 countries, which represents more than 80% of NFLX’s revenue base, is also expected to aid growth.
NFLX’s diversified content portfolio, which is attributable to heavy investments in the production and distribution of localized, foreign-language content, has been driving its growth prospects. We expect 2023 net sales to rise 6.2% from 2022.
Netflix has an expected revenue and earnings growth rate of 14.3% and 32.7%, 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 benefitting 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 13.7% and 38.1%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.9% over the last 60 days.
Carnival Corp. & plc (CCL - Free Report) is benefiting from improved booking trends, courtesy of solid demand, bundled package offerings and increased advertising activities. CCL has secured bookings for nearly two-thirds of its business for 2024, with significantly higher prices. Also, focus on fleet-optimization initiatives bodes well for CCL.
Carnival has an expected revenue and earnings growth rate of 13.6% and 39.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings the has improved 5.4% over the last 30 days.
DraftKings Inc. (DKNG - Free Report) is a digital sports entertainment and gaming company catering to the competitive spirits of sports fans with products that include daily fantasy, regulated gaming, and digital media. DKNG is the only U.S.-based vertically integrated sports betting operator.
DKNG is a multi-channel provider of sports betting and gaming technologies, powering sports and gaming entertainment for 50 operators across more than 15 U.S. and global markets.
DraftKings has an expected revenue and earnings growth rate of 28.4% and 85.1%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4.3% over the last 30 days.
Snap-on Inc. (SNA - Free Report) has been benefiting from continued positive business momentum and contributions from its Value Creation plan. Higher sales volume, pricing actions, lower material and other costs, as well as gains from SNA’s Rapid Continuous Improvement initiatives, have been aiding margin expansion. We expect the gross margin to increase 120 basis points year over year in 2023. SNA is on track with its other cost-reduction initiatives.
Snap-on has an expected revenue and earnings growth rate of 3.3% and 4.3%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 30 days.