5 Solid Stocks to Buy on Rebound in Consumer Confidence
Americans regained their confidence in May after three months, although inflation worries persisted. Also, consumers are much more confident about the current business scenario and hopeful about future business conditions.
Consumers’ confidence hit rock bottom over the past three months as concerns grew over higher food, energy and shelter costs. However, it rebounded in May. The Conference Board said on May 28 that the consumer confidence index rose to 102 in May from an upwardly revised 95.7 in the prior month.
May’s reading was well above the consensus estimate of a decline to 95.9 from the initially reported 97 in April.
The Present Situation Index, a gauge of the consumers’ assessment of current business and labor market conditions, jumped to 143.1 in May from 140.6 in April. Also, the Expectations Index, a gauge of the consumers’ short-term outlook for income, business and labor market conditions, rose to 74.6 in May from 68.8 in April.
One of the major reasons behind the jump in consumer confidence is the decline in inflation in April. Although inflation is still a major concern and is well above the Fed’s 2% target, it finally started showing signs of cooling in April after increasing in the first quarter.
Also, a cooling labor market has raised optimism among consumers. Job openings are shrinking, which is being seen by consumers as a good sign that could lead the Federal Reserve to start its rate cuts soon.
Our Choices
Given this scenario, we have narrowed our search to five consumer discretionary stocks such as Crocs, Inc. CROX, PlayAGS, Inc. AGS, Dolby Laboratories, Inc. DLB, Netflix, Inc. NFLX and Royal Caribbean Cruises Ltd. RCLthat have strong potential for 2024. 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.
Crocs, Inc. is one of the leading footwear brands, with a focus on comfort and style. CROX offers a wide variety of footwear products, including sandals, wedges, flips and slides, that cater to people of all ages.
Crocs’ expected earnings growth rate for the current year is 5.2%. The Zacks Consensus Estimate for current-year earnings has improved 1.8% over the past 60 days. CROX presently has a Zacks Rank #2.
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, Inc.’s expected earnings growth rate for the current year is 3,000%. The Zacks Consensus Estimate for current-year earnings has improved 61.3% over the past 60 days. AGS currently sports a Zacks Rank #1.
Dolby Laboratories, Inc. develops audio and imaging technologies that revolutionize entertainment for user-generated content, TV shows, films, music, and gaming. A majority of DLB’s revenues are derived from the licensing of audio technologies. Dolby Laboratories operates on various licensing models, including a two-tier model, an integrated licensing model, a patent licensing model, recoveries and collaboration arrangements.
Dolby Laboratories’expected earnings growth rate for the current year is 4.2%. The Zacks Consensus Estimate for current-year earnings has improved 12.8% over the past 60 days. DLB currently has a Zacks Rank #2.
Netflix, Inc. 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 52.2%. The Zacks Consensus Estimate for the current-year earnings has improved 7.5% over the past 60 days. NFLX currently carries 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' 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 61.9%. The Zacks Consensus Estimate for current-year earnings has improved 9.5% over the past 60 days. RCL currently sports a Zacks Rank #1.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Dolby Laboratories (DLB) : Free Stock Analysis Report
Netflix, Inc. (NFLX) : Free Stock Analysis Report
Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report
Crocs, Inc. (CROX) : Free Stock Analysis Report
PlayAGS, Inc. (AGS) : Free Stock Analysis Report
