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5 Stocks to Buy as Consumer Sentiment Hits Two-and-Half-Year High
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Americans are a lot more upbeat about the economy and its future now as inflation continues to ease and chances of rate cuts become brighter. The latest University of Michigan consumer sentiment survey, released on Jan 19, shows that consumers’ sentiment hit its highest level in more than two and a half years.
The preliminary index of consumer sentiment in January came up with a reading of 78.8, surpassing estimates of 69.7. The final reading for December consumer sentiment was 69.7. December’s reading is the highest since July 2021. The 13.1% jump also marks the fastest escalation since December 2005.
The sub-index for the current economic condition rose to 83.3 in January, up from 73.3 in December. Also, the sub-index for consumer expectations in January climbed to 75.9 from 67.4 in December.
The survey's measurement of one-year inflation expectations dropped to 2.9% in January, down from 3.1% the month earlier and the lowest level since December 2020. Also, the long-run or five-year inflation expectations declined to 2.8%, below the 2.9-3.1% range seen for 26 of the past 30 months.
Easing inflation has made the Federal Reserve official their stance from hawkish to dovish over the past month. Expectations are now high that the Federal Reserve will go for at least three 25-basis-point rate cuts in 2024, which bodes well for the economy. Lower interest rates will further help consumers spend more freely.
Our Choices
We have narrowed our search to five consumer discretionary 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 #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Royal Caribbean Cruises Ltd. (RCL - Free Report) owns and operates three global brands — Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises. Additionally, RCL has a 50% investment in a joint venture with TUI AG, which operates the brand TUI Cruises. Royal Caribbean Cruises' brands primarily serve the contemporary, premium and deluxe segments of the cruise vacation industry, which also includes the budget and luxury segments.
Royal Caribbean Cruises' expected earnings growth rate for the current year is 188.3%. The Zacks Consensus Estimate for current-year earnings has improved 1.4% over the past 60 days. RCL currently sports a Zacks Rank #1.
Electronic Arts Inc. (EA - Free Report) , popularly known as EA, is a leading developer, marketer, publisher and distributor of digital interactive entertainment, including games, extra content and services. EA’s portfolio includes wholly owned games like Apex Legends, Battlefield, and The Sims or licensed from others, including Madden NFL, Star Wars and others.
Electronic Arts’expected earnings growth rate for the current year is 28.6%. The Zacks Consensus Estimate for the current-year earnings has improved 3.4% over the past 60 days. EA presently carries a Zacks Rank #2.
Lululemon Athletica Inc. (LULU - Free Report) designs, manufactures and distributes athletic apparel and accessories for women, men and female youth. LULU offers a line of apparel assortment, including fitness pants, shorts, tops and jackets designed for a healthy lifestyle and athletic pursuits, such as yoga, training, and running, as well as other sweaty and general fitness under the lululemon athletica brand name.
Lululemon Athletica’s expected earnings growth rate for the current year is 23.7%. The Zacks Consensus Estimate for the current-year earnings has improved 2.6% over the past 60 days. LULU presently carries a Zacks Rank #2.
Netflix, Inc. (NFLX - Free Report) is considered a pioneer in the streaming space. NFLX has been spending aggressively on building its portfolio of original shows. This is helping Netflix sustain its leading position despite the launch of new services like Disney+ and Apple TV+, as well as existing services like Amazon Prime Video.
Netflix’s expected earnings growth rate for the current year is 21.7%. The Zacks Consensus Estimate for the current-year earnings has improved 0.2% over the past 60 days. Netflix currently has a Zacks Rank #2.
OneSpaWorld Holdings (OSW - Free Report) is a provider and innovator in the fields of wellness, beauty, rejuvenation and transformation on cruise ships and land. OSW’s service includes traditional and alternative massage, body and skincare treatment options, ayurvedic treatments, comprehensive hair and nail services, fitness, acupuncture, herbal medicine, pain management, and medi-spa.
OneSpaWorld Holdings’ expected earnings growth rate for the current year is 139.3%. The Zacks Consensus Estimate for current-year earnings has improved 3.1% over the past 60 days. OSW presently carries a Zacks Rank #2.
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5 Stocks to Buy as Consumer Sentiment Hits Two-and-Half-Year High
Americans are a lot more upbeat about the economy and its future now as inflation continues to ease and chances of rate cuts become brighter. The latest University of Michigan consumer sentiment survey, released on Jan 19, shows that consumers’ sentiment hit its highest level in more than two and a half years.
The preliminary index of consumer sentiment in January came up with a reading of 78.8, surpassing estimates of 69.7. The final reading for December consumer sentiment was 69.7. December’s reading is the highest since July 2021. The 13.1% jump also marks the fastest escalation since December 2005.
The sub-index for the current economic condition rose to 83.3 in January, up from 73.3 in December. Also, the sub-index for consumer expectations in January climbed to 75.9 from 67.4 in December.
The survey's measurement of one-year inflation expectations dropped to 2.9% in January, down from 3.1% the month earlier and the lowest level since December 2020. Also, the long-run or five-year inflation expectations declined to 2.8%, below the 2.9-3.1% range seen for 26 of the past 30 months.
Easing inflation has made the Federal Reserve official their stance from hawkish to dovish over the past month. Expectations are now high that the Federal Reserve will go for at least three 25-basis-point rate cuts in 2024, which bodes well for the economy. Lower interest rates will further help consumers spend more freely.
Our Choices
We have narrowed our search to five consumer discretionary 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 #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Royal Caribbean Cruises Ltd. (RCL - Free Report) owns and operates three global brands — Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises. Additionally, RCL has a 50% investment in a joint venture with TUI AG, which operates the brand TUI Cruises. Royal Caribbean Cruises' brands primarily serve the contemporary, premium and deluxe segments of the cruise vacation industry, which also includes the budget and luxury segments.
Royal Caribbean Cruises' expected earnings growth rate for the current year is 188.3%. The Zacks Consensus Estimate for current-year earnings has improved 1.4% over the past 60 days. RCL currently sports a Zacks Rank #1.
Electronic Arts Inc. (EA - Free Report) , popularly known as EA, is a leading developer, marketer, publisher and distributor of digital interactive entertainment, including games, extra content and services. EA’s portfolio includes wholly owned games like Apex Legends, Battlefield, and The Sims or licensed from others, including Madden NFL, Star Wars and others.
Electronic Arts’expected earnings growth rate for the current year is 28.6%. The Zacks Consensus Estimate for the current-year earnings has improved 3.4% over the past 60 days. EA presently carries a Zacks Rank #2.
Lululemon Athletica Inc. (LULU - Free Report) designs, manufactures and distributes athletic apparel and accessories for women, men and female youth. LULU offers a line of apparel assortment, including fitness pants, shorts, tops and jackets designed for a healthy lifestyle and athletic pursuits, such as yoga, training, and running, as well as other sweaty and general fitness under the lululemon athletica brand name.
Lululemon Athletica’s expected earnings growth rate for the current year is 23.7%. The Zacks Consensus Estimate for the current-year earnings has improved 2.6% over the past 60 days. LULU presently carries a Zacks Rank #2.
Netflix, Inc. (NFLX - Free Report) is considered a pioneer in the streaming space. NFLX has been spending aggressively on building its portfolio of original shows. This is helping Netflix sustain its leading position despite the launch of new services like Disney+ and Apple TV+, as well as existing services like Amazon Prime Video.
Netflix’s expected earnings growth rate for the current year is 21.7%. The Zacks Consensus Estimate for the current-year earnings has improved 0.2% over the past 60 days. Netflix currently has a Zacks Rank #2.
OneSpaWorld Holdings (OSW - Free Report) is a provider and innovator in the fields of wellness, beauty, rejuvenation and transformation on cruise ships and land. OSW’s service includes traditional and alternative massage, body and skincare treatment options, ayurvedic treatments, comprehensive hair and nail services, fitness, acupuncture, herbal medicine, pain management, and medi-spa.
OneSpaWorld Holdings’ expected earnings growth rate for the current year is 139.3%. The Zacks Consensus Estimate for current-year earnings has improved 3.1% over the past 60 days. OSW presently carries a Zacks Rank #2.