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5 Top Stocks to Gain From 9-Month High Consumer Sentiment
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Consumer sentiment took a beating last year, as households had to bear a spike in inflation to a record high that, in due course, weighed on their real incomes and impacted their living standards. The coronavirus pandemic-led pent-up consumer demand and supply-chain disruptions drove prices of indispensable commodities through the roof.
However, inflation has lately started showing signs of cooling off. The U.S. Bureau of Labor Statistics noted that the consumer price index (CPI) rose 6.5% on a year-over-year basis in December, down from November’s gain of 7.1%, and way less than June’s 40-year high of 9.1%. Thus, the annual rate of increase in consumer prices has now declined for six consecutive months.
The CPI, on a month-over-month basis, also declined by 0.1% last month and registered its first drop since the beginning of the coronavirus pandemic in 2020. A sustained drop in gasoline prices was primarily responsible for bringing down the cost of living. Gasoline prices, in reality, were down 10% in December after soaring past $5 a gallon in mid-2022.
Thus, at present, lower concerns over inflation boosted consumers’ sentiment in the United States. The University of Michigan’s preliminary result showed that the consumer sentiment index increased to 64.6 in January from December’s 59.7, and touched the highest level since April. Analysts had expected the index to increase to 60.7.
Similarly, the gauge assessing current economic conditions in the United States rose sharply to 68.6 this month from 59.4 in the prior month. The short-term expectations index also advanced to 62 from 59.9.
Nonetheless, consumer sentiment improved for the second successive month in January as inflation eased. And with an improvement in consumer sentiment, consumer discretionary stocks are poised to gain the most. This is because as consumers grew more hopeful about the U.S. economy amid a strong labor market, their spending is expected to improve, particularly on nonobligatory products and services.
We have, thus, highlighted five consumer discretionary stocks that are most likely to gain from solid consumer sentiment. These stocks carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here V stands for Value, G for Growth, and M for Momentum, and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today’s Zacks #1 Rank stocks here.
BJ's Wholesale Club (BJ - Free Report) provides perishable, general merchandise and other ancillary services. BJ currently has a Zacks Rank #2 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 5.6% over the past 60 days. BJ’s expected earnings growth rate for the current year is 16.6%.
International Game Technology (IGT - Free Report) is engaged in the design, development, manufacture and marketing of casino-style gaming equipment, systems technology and game content. IGT currently has a Zacks Rank #1 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 1.1% over the past 60 days. IGT’s expected earnings growth rate for the current year is 519.4%.
Wyndham Hotels & Resorts (WH - Free Report) provides a hotel and resort chain. WH currently has a Zacks Rank #1 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 0.8% over the past 60 days. WH’s expected earnings growth rate for the current year is 22.5%.
Nexstar Media Group (NXST - Free Report) currently owns, operates, programs, or provides sales and other services to television stations in the states of Illinois, Indiana, Maryland, Missouri, Montana, Texas, Pennsylvania, Louisiana, Arkansas, Alabama, and New York. NXST has a Zacks Rank #1, at present, and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 1% over the past 60 days. NXST’s expected earnings growth rate for the current year is almost 42%.
Bowlero (BOWL - Free Report) is an owner and operator of bowling centers as well as the owner of the Professional Bowlers Association. BOWL currently has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 35.2% over the past 60 days. BOWL’s expected earnings growth rate for the current year is almost 30.4%.
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5 Top Stocks to Gain From 9-Month High Consumer Sentiment
Consumer sentiment took a beating last year, as households had to bear a spike in inflation to a record high that, in due course, weighed on their real incomes and impacted their living standards. The coronavirus pandemic-led pent-up consumer demand and supply-chain disruptions drove prices of indispensable commodities through the roof.
However, inflation has lately started showing signs of cooling off. The U.S. Bureau of Labor Statistics noted that the consumer price index (CPI) rose 6.5% on a year-over-year basis in December, down from November’s gain of 7.1%, and way less than June’s 40-year high of 9.1%. Thus, the annual rate of increase in consumer prices has now declined for six consecutive months.
The CPI, on a month-over-month basis, also declined by 0.1% last month and registered its first drop since the beginning of the coronavirus pandemic in 2020. A sustained drop in gasoline prices was primarily responsible for bringing down the cost of living. Gasoline prices, in reality, were down 10% in December after soaring past $5 a gallon in mid-2022.
Thus, at present, lower concerns over inflation boosted consumers’ sentiment in the United States. The University of Michigan’s preliminary result showed that the consumer sentiment index increased to 64.6 in January from December’s 59.7, and touched the highest level since April. Analysts had expected the index to increase to 60.7.
Similarly, the gauge assessing current economic conditions in the United States rose sharply to 68.6 this month from 59.4 in the prior month. The short-term expectations index also advanced to 62 from 59.9.
Nonetheless, consumer sentiment improved for the second successive month in January as inflation eased. And with an improvement in consumer sentiment, consumer discretionary stocks are poised to gain the most. This is because as consumers grew more hopeful about the U.S. economy amid a strong labor market, their spending is expected to improve, particularly on nonobligatory products and services.
We have, thus, highlighted five consumer discretionary stocks that are most likely to gain from solid consumer sentiment. These stocks carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here V stands for Value, G for Growth, and M for Momentum, and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today’s Zacks #1 Rank stocks here.
BJ's Wholesale Club (BJ - Free Report) provides perishable, general merchandise and other ancillary services. BJ currently has a Zacks Rank #2 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 5.6% over the past 60 days. BJ’s expected earnings growth rate for the current year is 16.6%.
International Game Technology (IGT - Free Report) is engaged in the design, development, manufacture and marketing of casino-style gaming equipment, systems technology and game content. IGT currently has a Zacks Rank #1 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 1.1% over the past 60 days. IGT’s expected earnings growth rate for the current year is 519.4%.
Wyndham Hotels & Resorts (WH - Free Report) provides a hotel and resort chain. WH currently has a Zacks Rank #1 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 0.8% over the past 60 days. WH’s expected earnings growth rate for the current year is 22.5%.
Nexstar Media Group (NXST - Free Report) currently owns, operates, programs, or provides sales and other services to television stations in the states of Illinois, Indiana, Maryland, Missouri, Montana, Texas, Pennsylvania, Louisiana, Arkansas, Alabama, and New York. NXST has a Zacks Rank #1, at present, and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 1% over the past 60 days. NXST’s expected earnings growth rate for the current year is almost 42%.
Bowlero (BOWL - Free Report) is an owner and operator of bowling centers as well as the owner of the Professional Bowlers Association. BOWL currently has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 35.2% over the past 60 days. BOWL’s expected earnings growth rate for the current year is almost 30.4%.