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Buy 2 Consumer Discretionary Stocks on Strong Q3 Earnings
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Key Takeaways
Carnival's Q3 earnings and revenues beat estimates, fueled by resilient demand and strong bookings.
CCL projects continued yield gains as forward bookings outpace capacity and onboard spending rises.
Las Vegas Sands posts 24.2% revenue growth, driven by strong travel trends in Macao and Singapore.
Wall Street has witnessed a strong start to the third-quarter 2025 earnings season. We are at the initial stage of the reporting cycle. As of Oct. 22, 99 S&P 500 members reported their third-quarter financial numbers.
Total earnings of these 99 companies are up 13.7% year over year on 8.2% higher revenues. Moreover, 86.9% companies beat earnings estimates while 81.8% beat revenue estimates. Most importantly, 75.8% companies beat both earnings and revenue estimates. For the S&P 500 Index as a whole, our estimates currently show that total third-quarter earnings are expected to grow 7.3% year over year on 6.7% higher revenues.
At this stage, we recommend investing in two consumer discretionary stocks following their solid third-quarter earnings results. These stocks are: Carnival Corporation & plc (CCL - Free Report) and Las Vegas Sands Corp. (LVS - Free Report) . Each of our picks currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Why Consumer Discretionary Stocks?
The consumer discretionary sector witnessed moderate growth in the first three quarters of 2025, despite a strong rally in U.S. stock markets. The situation is likely to improve in the fourth quarter.
Structurally, the consumer discretionary sector is growth-oriented. The share prices of these companies grow over a long time period. Growth sectors are sensitive to the movement of market interest rates and are inversely related.
The Fed cut the benchmark lending rate by 25 basis points in September for the first time in 2025. The central bank’s dot-plot showed that two more rate cuts of 25 basis points each are expected this year.
The CME FedWatch interest rate derivative tool currently shows a 98.9% probability that the Fed will reduce the Fed fund rate by 25 basis points in October and a 91.8% probability that the central bank will further reduce the rate by another 0.25% in December.
A low-interest rate will reduce the discount, thereby raising the net present value of investment in growth stocks. Consequently, a low-interest rate regime will benefit growth sectors such as consumer discretionary, technology and cryptocurrency.
The chart below shows the price performance of our two picks in the past three months.
Image Source: Zacks Investment Research
Carnival Corp. & plc
Carnival has been benefiting from resilient travel demand, stronger booking trends, higher onboard spending, and disciplined cost management. Carnival is aggressively expanding its destination footprint to enhance guest experiences and drive high-margin revenue growth. CCL continues to invest in modern, guest-centric ships to fuel long-term demand.
CCL reported that forward bookings for 2026 are outpacing capacity growth, with both North American and European brands achieving record pricing levels. With limited capacity additions and strong onboard revenue trends, the company anticipates yield gains in fiscal 2026 and beyond
AIDAdiva, the first vessel completed under the AIDA Evolution refurbishment program, has seen strong post-upgrade performance, prompting six additional AIDA ships to undergo similar transformations. CCL also ordered two newbuilds for AIDA, scheduled for delivery in 2030 and 2032.
Carnival reported adjusted earnings of $1.43 per share, surpassing the Zacks Consensus Estimate of $1.32 and the year-ago quarter earnings of $1.27 per share. Quarterly revenues came in at $8.15 billion, outpacing the Zacks Consensus Estimate of $8.07 billion and rising 3.3% year over year.
Excellent Short-Term Upside for CCL Stock
Carnival has an expected revenue and earnings growth rate of 6.5% and 51.4%, respectively, for the current year (ending November 2025). The Zacks Consensus Estimate for current-year earnings has improved 6.4% over the past 30 days.
CCL has an expected revenue and earnings growth rate of 4.3% and 11.7%, respectively, for next year (ending November 2026). The Zacks Consensus Estimate for next-year earnings has improved 0.4% over the past 30 days.
The short-term average price target of brokerage firms for the stock represents an increase of 20.1% from the last closing price of $29.44. The brokerage target price is currently in the range of $26-$43. This indicates a maximum upside of 46.1% and a downside of 11.7%.
Las Vegas Sands Corp.
Las Vegas Sands reported adjusted earnings of 78 cents per share, surpassing the Zacks Consensus Estimate of 62 cents and the year-ago quarter earnings of 44 cents per share. Quarterly revenues came in at $3.33 billion, outpacing the Zacks Consensus Estimate of $3.01 billion and rising 24.2% year over year.
LVS is benefiting from strong travel demand and improved operating conditions in Macao and Singapore. LVS reported solid progress on its strategic goals and continues to focus on driving growth in both regions through ongoing capital investments.
In Singapore, strong performance at Marina Bay Sands was supported by new suite offerings and rising travel across Asia. LVS remains focused on expanding non-gaming opportunities in Macao.
Attractive Short-Term Upside for LVS Stock
Las Vegas Sands has an expected revenue and earnings growth rate of 7.9% and 18.1%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the past seven days.
LVS has an expected revenue and earnings growth rate of 4.4% and 7.4%, respectively, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 0.7% over the past seven days.
The short-term average price target of brokerage firms for the stock represents an increase of 6.8% from the last closing price of $56.89. The brokerage target price is currently in the range of $50-$73.50. This indicates a maximum upside of 29.2% and a downside of 12.1%.
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Buy 2 Consumer Discretionary Stocks on Strong Q3 Earnings
Key Takeaways
Wall Street has witnessed a strong start to the third-quarter 2025 earnings season. We are at the initial stage of the reporting cycle. As of Oct. 22, 99 S&P 500 members reported their third-quarter financial numbers.
Total earnings of these 99 companies are up 13.7% year over year on 8.2% higher revenues. Moreover, 86.9% companies beat earnings estimates while 81.8% beat revenue estimates. Most importantly, 75.8% companies beat both earnings and revenue estimates. For the S&P 500 Index as a whole, our estimates currently show that total third-quarter earnings are expected to grow 7.3% year over year on 6.7% higher revenues.
At this stage, we recommend investing in two consumer discretionary stocks following their solid third-quarter earnings results. These stocks are: Carnival Corporation & plc (CCL - Free Report) and Las Vegas Sands Corp. (LVS - Free Report) . Each of our picks currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Why Consumer Discretionary Stocks?
The consumer discretionary sector witnessed moderate growth in the first three quarters of 2025, despite a strong rally in U.S. stock markets. The situation is likely to improve in the fourth quarter.
Structurally, the consumer discretionary sector is growth-oriented. The share prices of these companies grow over a long time period. Growth sectors are sensitive to the movement of market interest rates and are inversely related.
The Fed cut the benchmark lending rate by 25 basis points in September for the first time in 2025. The central bank’s dot-plot showed that two more rate cuts of 25 basis points each are expected this year.
The CME FedWatch interest rate derivative tool currently shows a 98.9% probability that the Fed will reduce the Fed fund rate by 25 basis points in October and a 91.8% probability that the central bank will further reduce the rate by another 0.25% in December.
A low-interest rate will reduce the discount, thereby raising the net present value of investment in growth stocks. Consequently, a low-interest rate regime will benefit growth sectors such as consumer discretionary, technology and cryptocurrency.
The chart below shows the price performance of our two picks in the past three months.
Image Source: Zacks Investment Research
Carnival Corp. & plc
Carnival has been benefiting from resilient travel demand, stronger booking trends, higher onboard spending, and disciplined cost management. Carnival is aggressively expanding its destination footprint to enhance guest experiences and drive high-margin revenue growth. CCL continues to invest in modern, guest-centric ships to fuel long-term demand.
CCL reported that forward bookings for 2026 are outpacing capacity growth, with both North American and European brands achieving record pricing levels. With limited capacity additions and strong onboard revenue trends, the company anticipates yield gains in fiscal 2026 and beyond
AIDAdiva, the first vessel completed under the AIDA Evolution refurbishment program, has seen strong post-upgrade performance, prompting six additional AIDA ships to undergo similar transformations. CCL also ordered two newbuilds for AIDA, scheduled for delivery in 2030 and 2032.
Carnival reported adjusted earnings of $1.43 per share, surpassing the Zacks Consensus Estimate of $1.32 and the year-ago quarter earnings of $1.27 per share. Quarterly revenues came in at $8.15 billion, outpacing the Zacks Consensus Estimate of $8.07 billion and rising 3.3% year over year.
Excellent Short-Term Upside for CCL Stock
Carnival has an expected revenue and earnings growth rate of 6.5% and 51.4%, respectively, for the current year (ending November 2025). The Zacks Consensus Estimate for current-year earnings has improved 6.4% over the past 30 days.
CCL has an expected revenue and earnings growth rate of 4.3% and 11.7%, respectively, for next year (ending November 2026). The Zacks Consensus Estimate for next-year earnings has improved 0.4% over the past 30 days.
The short-term average price target of brokerage firms for the stock represents an increase of 20.1% from the last closing price of $29.44. The brokerage target price is currently in the range of $26-$43. This indicates a maximum upside of 46.1% and a downside of 11.7%.
Las Vegas Sands Corp.
Las Vegas Sands reported adjusted earnings of 78 cents per share, surpassing the Zacks Consensus Estimate of 62 cents and the year-ago quarter earnings of 44 cents per share. Quarterly revenues came in at $3.33 billion, outpacing the Zacks Consensus Estimate of $3.01 billion and rising 24.2% year over year.
LVS is benefiting from strong travel demand and improved operating conditions in Macao and Singapore. LVS reported solid progress on its strategic goals and continues to focus on driving growth in both regions through ongoing capital investments.
In Singapore, strong performance at Marina Bay Sands was supported by new suite offerings and rising travel across Asia. LVS remains focused on expanding non-gaming opportunities in Macao.
Attractive Short-Term Upside for LVS Stock
Las Vegas Sands has an expected revenue and earnings growth rate of 7.9% and 18.1%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the past seven days.
LVS has an expected revenue and earnings growth rate of 4.4% and 7.4%, respectively, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 0.7% over the past seven days.
The short-term average price target of brokerage firms for the stock represents an increase of 6.8% from the last closing price of $56.89. The brokerage target price is currently in the range of $50-$73.50. This indicates a maximum upside of 29.2% and a downside of 12.1%.