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Americans are a lot more confident about the economy than they were till last month. Cooling inflation and the Federal Reserve’s hint at starting rate cuts have made them more confident about the economy’s health.
Consumer confidence in August jumped on hopes that lower borrowing costs in the coming months will give people more spending power and boost the nation’s economy. Given this situation, it would be ideal to invest in discretionary stocks such as Cinemark Holdings, Inc. (CNK - Free Report) , Traeger, Inc. (COOK - Free Report) , Kontoor Brands, Inc. (KTB - Free Report) and Royal Caribbean Cruises Ltd. (RCL - Free Report) .
Consumer Confidence Rebounds
The Conference Board reported on Tuesday that U.S. consumer confidence jumped to 103.3 for the month from an upwardly revised 101.9 in July to hit its highest level in six months. This was also sharply higher than the consensus estimate of a reading of 100.3.
The Present Situation Index, a gauge of consumers' assessment of current business and labor market situations, climbed to 134.4 in August from 133.1 the month earlier.
The Expectations Index, a gauge of the consumers' short-term outlook for income, business, and labor market conditions, rose to 82.5 from 81.1 in July, hitting its highest level since August 2023. This was the second consecutive month that the reading came above 80. Any reading below 80 indicates impending recession.
Slowing Inflation, Political Factors Boost Confidence
Fears gripped Wall Street earlier this month leading to a massive selloff on fears that the economy could slip into a recession. However, fresh economic data, released over the past three weeks showed that the economy is still holding strong, which has alleviated the fears.
August’s jump was also driven by some major political moves in the country. President Joe Biden’s decision to drop out of the 2024 presidential race and nomination of Vice President Kamala Harris to run for the White House also likely influenced the rise in consumer confidence.
Inflation has been cooling over the past few months. This has finally seen the Federal Reserve hinting at rate cuts. Last week, Federal Reserve Chairman Jerome Powell signaled that rate cuts are on the horizon.
Markets are now pricing in a 25-basis-point rate cut in September, with many even confident about a 50-basis-point cut in interest rates. Lower borrowing rates typically benefit growth stocks like tech and consumer discretionary.
4 Consumer Discretionary Stocks With Price Upside
We have thus chosen four discretionary that are likely to benefit in the near term. 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.
Cinemark Holdings, Inc.
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 26.2% over the past 60 days. CNK currently carries a Zacks Rank #2.
Image Source: Zacks Investment Research
Traeger, Inc.
Traeger, Inc. provides wood pellet grills. COOK’s pellet grills utilize wood-fired convection power, owners can grill, smoke, bake, roast, braise and barbecue meals on one cooking system.
Traeger’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 100% over the past 60 days. COOK currently carries a Zacks Rank #2.
Image Source: Zacks Investment Research
Kontoor Brands, Inc.
Kontoor Brands, Inc. is an apparel company. KTB designs, manufactures and distributes products. KTB’sbrand consists of Wrangler, Lee and Rock & Republic. Kontoor Brands Inc. is based in Greensboro.
Kontoor Brands’ expected earnings growth rate for the current year is 12.7%. The Zacks Consensus Estimate for current-year earnings has improved 1.5% over the past 60 days. KTB currently carries a Zacks Rank #2.
Image Source: Zacks Investment Research
Royal Caribbean Cruises Ltd.
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 69.9%. The Zacks Consensus Estimate for current-year earnings has improved 3.6% over the past 60 days. RCL currently has a Zacks Rank #1.
Image Source: Zacks Investment Research
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Rate Cut Hopes Lift Confidence: 4 Consumer Discretionary Stocks to Buy
Americans are a lot more confident about the economy than they were till last month. Cooling inflation and the Federal Reserve’s hint at starting rate cuts have made them more confident about the economy’s health.
Consumer confidence in August jumped on hopes that lower borrowing costs in the coming months will give people more spending power and boost the nation’s economy. Given this situation, it would be ideal to invest in discretionary stocks such as Cinemark Holdings, Inc. (CNK - Free Report) , Traeger, Inc. (COOK - Free Report) , Kontoor Brands, Inc. (KTB - Free Report) and Royal Caribbean Cruises Ltd. (RCL - Free Report) .
Consumer Confidence Rebounds
The Conference Board reported on Tuesday that U.S. consumer confidence jumped to 103.3 for the month from an upwardly revised 101.9 in July to hit its highest level in six months. This was also sharply higher than the consensus estimate of a reading of 100.3.
The Present Situation Index, a gauge of consumers' assessment of current business and labor market situations, climbed to 134.4 in August from 133.1 the month earlier.
The Expectations Index, a gauge of the consumers' short-term outlook for income, business, and labor market conditions, rose to 82.5 from 81.1 in July, hitting its highest level since August 2023. This was the second consecutive month that the reading came above 80. Any reading below 80 indicates impending recession.
Slowing Inflation, Political Factors Boost Confidence
Fears gripped Wall Street earlier this month leading to a massive selloff on fears that the economy could slip into a recession. However, fresh economic data, released over the past three weeks showed that the economy is still holding strong, which has alleviated the fears.
August’s jump was also driven by some major political moves in the country. President Joe Biden’s decision to drop out of the 2024 presidential race and nomination of Vice President Kamala Harris to run for the White House also likely influenced the rise in consumer confidence.
Inflation has been cooling over the past few months. This has finally seen the Federal Reserve hinting at rate cuts. Last week, Federal Reserve Chairman Jerome Powell signaled that rate cuts are on the horizon.
Markets are now pricing in a 25-basis-point rate cut in September, with many even confident about a 50-basis-point cut in interest rates. Lower borrowing rates typically benefit growth stocks like tech and consumer discretionary.
4 Consumer Discretionary Stocks With Price Upside
We have thus chosen four discretionary that are likely to benefit in the near term. 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.
Cinemark Holdings, Inc.
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 26.2% over the past 60 days. CNK currently carries a Zacks Rank #2.
Image Source: Zacks Investment Research
Traeger, Inc.
Traeger, Inc. provides wood pellet grills. COOK’s pellet grills utilize wood-fired convection power, owners can grill, smoke, bake, roast, braise and barbecue meals on one cooking system.
Traeger’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 100% over the past 60 days. COOK currently carries a Zacks Rank #2.
Image Source: Zacks Investment Research
Kontoor Brands, Inc.
Kontoor Brands, Inc. is an apparel company. KTB designs, manufactures and distributes products. KTB’sbrand consists of Wrangler, Lee and Rock & Republic. Kontoor Brands Inc. is based in Greensboro.
Kontoor Brands’ expected earnings growth rate for the current year is 12.7%. The Zacks Consensus Estimate for current-year earnings has improved 1.5% over the past 60 days. KTB currently carries a Zacks Rank #2.
Image Source: Zacks Investment Research
Royal Caribbean Cruises Ltd.
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 69.9%. The Zacks Consensus Estimate for current-year earnings has improved 3.6% over the past 60 days. RCL currently has a Zacks Rank #1.
Image Source: Zacks Investment Research