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Wall Street Rebounds as Rate Cut Hopes Rise: 5 Stocks to Buy
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This has been an eventful week for Wall Street, which suffered a bloodbath on Aug 5. Billions of dollars were wiped out of the market cap of hundreds of companies after a weak jobs report last week reignited fears that the economy might slip into a recession as higher interest rates continue to hurt industries and consumers.
One week down the line, the situation appears to be stabilizing as fresh data showed that jobless claims declined more than expected. Following the release of the report, all three major indexes rebounded, with the S&P 500 and Nasdaq recording their best days since November 2022.
The S&P 500 jumped 119.81 points or 2.2% to close at 5,319.31, while the Nasdaq rose 464.22 points or 2.9% to finish at 16,660.02. The Dow Jones Industrial Average gained 683.04 points, or 1.8%, to end at 39,446.49.
Fears of an impending recession were ignited last week after data showed that only 179,000 jobs were added in July, while the unemployment rate peaked at 4.3%. Investors felt that the Federal Reserve may have held interest rates higher for too long, which has started taking its toll on the economy.
The Fed raised interest rates by 525 basis points to take interest rates to a 23-year-high in the current range of 5.25-5.5% in its desperate attempt to fight sky-high inflation.
Despite the selloff earlier this week, several experts and the Federal Reserve are confident that the economy will make a softer landing and avoid recession, as inflation has been showing signs of declining over the past quarter.
The Federal Reserve is also gearing up to start its rate cut cycle, which is likely to begin in September.
The Fed had earlier indicated only a single 25 basis point rate cut, but cooling inflation has raised hopes of multiple cuts. Markets are now pricing in a 50-basis point rate cut in September, to be followed by two more cuts of 25 and 50 basis points in November and December.
Lower rate cuts mean lower borrowing costs, which typically favor growth stocks such as technology and consumer discretionary.
Our Choices
Given this scenario, we have narrowed our search to four consumer discretionary stocks such asPlayAGS, Inc. (AGS - Free Report) , Cinemark Holdings, Inc. (CNK - Free Report) , Hilton Grand Vacations Inc. (HGV - Free Report) , Royal Caribbean Cruises Ltd. (RCL - Free Report) and YETI Holdings, Inc. (YETI - Free Report) .
PlayAGS, Inc. is a designer and supplier of electronic gaming machines and other products and services for the gaming industry. AGS’ product line-up includes Class III EGMs for commercial and Native American casinos, video bingo machines for select international markets, table game products and interactive social casino products.
PlayAGS’ expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 77.4% over the past 60 days. AGS currently sports a Zacks Rank #1.
Cinemark Holdings, Inc. is a leader in the motion picture exhibition industry. CNK operates 408 theatres and 4,657 screens in 38 states in the United States and internationally in 12 countries, mainly in Mexico, South and Central America.
Cinemark Holdings’ expected earnings growth rate for the current year is 0.8%. The Zacks Consensus Estimate for current-year earnings has improved 22.7% over the past 60 days. CNK currently carries a Zacks Rank #2.
Hilton Grand Vacations Inc. is engaged in the hospitality business. HGV markets and operates vacation ownership resorts. Hilton Grand Vacationsalso manages and serves club membership programs, which include Hilton Grand Vacations Club and The Hilton Club.
Hilton Grand Vacations’ expected earnings growth rate for the current year is 8.8%. The Zacks Consensus Estimate for current-year earnings has improved 5.6% over the past 60 days. HGV presently sports a Zacks Rank #1.
Royal Caribbean Cruises Ltd. 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’ cruise 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 68.4%. The Zacks Consensus Estimate for current-year earnings has improved 2.8% over the past 60 days. RCL currently has a Zacks Rank #1.
YETI Holdings, Inc. YETI designs, markets and distributes products for the outdoor and recreation market under the YETI brand, primarily in the United States. The company's products are designed for outdoor activities, including hunting, fishing, camping, barbecue, and farm and ranch activities, among others.
YETI Holdings’ expected earnings growth rate for the current year is 15.6%. The Zacks Consensus Estimate for current-year earnings improved 0.4% over the past 60 days. YETI currently carries a Zacks Rank #2.
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Wall Street Rebounds as Rate Cut Hopes Rise: 5 Stocks to Buy
This has been an eventful week for Wall Street, which suffered a bloodbath on Aug 5. Billions of dollars were wiped out of the market cap of hundreds of companies after a weak jobs report last week reignited fears that the economy might slip into a recession as higher interest rates continue to hurt industries and consumers.
One week down the line, the situation appears to be stabilizing as fresh data showed that jobless claims declined more than expected. Following the release of the report, all three major indexes rebounded, with the S&P 500 and Nasdaq recording their best days since November 2022.
The S&P 500 jumped 119.81 points or 2.2% to close at 5,319.31, while the Nasdaq rose 464.22 points or 2.9% to finish at 16,660.02. The Dow Jones Industrial Average gained 683.04 points, or 1.8%, to end at 39,446.49.
Fears of an impending recession were ignited last week after data showed that only 179,000 jobs were added in July, while the unemployment rate peaked at 4.3%. Investors felt that the Federal Reserve may have held interest rates higher for too long, which has started taking its toll on the economy.
The Fed raised interest rates by 525 basis points to take interest rates to a 23-year-high in the current range of 5.25-5.5% in its desperate attempt to fight sky-high inflation.
Despite the selloff earlier this week, several experts and the Federal Reserve are confident that the economy will make a softer landing and avoid recession, as inflation has been showing signs of declining over the past quarter.
The Federal Reserve is also gearing up to start its rate cut cycle, which is likely to begin in September.
The Fed had earlier indicated only a single 25 basis point rate cut, but cooling inflation has raised hopes of multiple cuts. Markets are now pricing in a 50-basis point rate cut in September, to be followed by two more cuts of 25 and 50 basis points in November and December.
Lower rate cuts mean lower borrowing costs, which typically favor growth stocks such as technology and consumer discretionary.
Our Choices
Given this scenario, we have narrowed our search to four consumer discretionary stocks such asPlayAGS, Inc. (AGS - Free Report) , Cinemark Holdings, Inc. (CNK - Free Report) , Hilton Grand Vacations Inc. (HGV - Free Report) , Royal Caribbean Cruises Ltd. (RCL - Free Report) and YETI Holdings, Inc. (YETI - Free Report) .
These stocks have seen positive earnings estimate revisions in the last 60 days. Each of the stocks has a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
PlayAGS, Inc. is a designer and supplier of electronic gaming machines and other products and services for the gaming industry. AGS’ product line-up includes Class III EGMs for commercial and Native American casinos, video bingo machines for select international markets, table game products and interactive social casino products.
PlayAGS’ expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 77.4% over the past 60 days. AGS currently sports a Zacks Rank #1.
Cinemark Holdings, Inc. is a leader in the motion picture exhibition industry. CNK operates 408 theatres and 4,657 screens in 38 states in the United States and internationally in 12 countries, mainly in Mexico, South and Central America.
Cinemark Holdings’ expected earnings growth rate for the current year is 0.8%. The Zacks Consensus Estimate for current-year earnings has improved 22.7% over the past 60 days. CNK currently carries a Zacks Rank #2.
Hilton Grand Vacations Inc. is engaged in the hospitality business. HGV markets and operates vacation ownership resorts. Hilton Grand Vacationsalso manages and serves club membership programs, which include Hilton Grand Vacations Club and The Hilton Club.
Hilton Grand Vacations’ expected earnings growth rate for the current year is 8.8%. The Zacks Consensus Estimate for current-year earnings has improved 5.6% over the past 60 days. HGV presently sports a Zacks Rank #1.
Royal Caribbean Cruises Ltd. 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’ cruise 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 68.4%. The Zacks Consensus Estimate for current-year earnings has improved 2.8% over the past 60 days. RCL currently has a Zacks Rank #1.
YETI Holdings, Inc. YETI designs, markets and distributes products for the outdoor and recreation market under the YETI brand, primarily in the United States. The company's products are designed for outdoor activities, including hunting, fishing, camping, barbecue, and farm and ranch activities, among others.
YETI Holdings’ expected earnings growth rate for the current year is 15.6%. The Zacks Consensus Estimate for current-year earnings improved 0.4% over the past 60 days. YETI currently carries a Zacks Rank #2.