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4 Solid Stocks to Buy as Inflation Continues to Cool
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Markets rallied in November and the upbeat sentiment has continued into December as investors sentiment remains upbeat on signs of cooling inflation. The Bureau of Labor Statistics reported on Dec 12 that inflation eased further in November.
Also, the Federal Reserve kept interest rates unaltered in its December policy meeting on Wednesday and hinted at implementing rate cuts in 2024. Given this situation, investing in consumer discretionary stocks like Virco Mfg. Corporation (VIRC - Free Report) , Comcast Corporation (CMCSA - Free Report) , Warner Music Group Corp. (WMG - Free Report) and The RealReal, Inc. (REAL - Free Report) would be an ideal choice.
Inflation Cools Further
The Consumer Price Index (CPI) rose 3.1% year over year in November, lower than October’s jump of 3.2% and in line with economists’ expectations, the Bureau of Labor Statistics reported on Dec 12.
On a month-over-month basis, CPI increased 0.1% in November. Core CPI, which excludes the volatile food and energy prices, increased 0.3% month over month in November. Core CPI rose 4% year over year.
The decline in November inflation can be attributed to a 2.3% drop in energy prices, as gasoline prices dipped 6%, while oil prices fell 2.7%.
Also, the producer price index (PPI) for final demand increased just 0.9% in November compared to a jump of 1.2% in October.
Year over year, Core PPI rose 2% in November, lower than October’s reading of a rise of 2.4% and economists’ expectations of 2.2%. Month over month, the Core PPI remained unchanged for the second straight month.
Although inflation is still higher than the Federal Reserve’s target of 2%, it has continued to move in the preferred direction for the Fed.
This came as the Fed on Dec 13 kept its benchmark policy rate unchanged in the range of 5.25-5.5% for the third straight time after hiking rates by 525 basis points since March 2022.
Fed Chair Jerome Powell said that he believes that the central bank’s benchmark policy rate is now at its peak and it doesn’t plan to keep interest rates high for too long.
Although the Fed didn’t give a specific time for the first rate cut, market participants believe that it could happen as early as May. The Fed had earlier revised its rate cut forecast to two from four in 2024, with the first cut not coming before September.
Lower borrowing costs definitely bode well for the economy and the present situation indicates a softer landing for the economy. The positive data comes during the peak of the holiday season when people tend to spend lavishly.
Our Choices
Therefore, from an investment perspective, we have identified four stocks from the consumer discretionary sector that are likely to capitalize on reduced inflationary pressure. Each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Virco Mfg. Corporation designs, produces and distributes quality furniture for the contract and education markets worldwide. Examples of facilities served by VIRC include public and private schools, colleges and universities, convention centers, federal and state institutions, churches and other businesses. Virco Mfg also sells to wholesalers, distributors, retailers and catalog retailers.
Virco Mfg’s expected earnings growth rate for the current year is 32.4%. The Zacks Consensus Estimate for current-year earnings has improved 20.5% over the past 60 days. VIRC currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Comcast Corporation is a global media and technology company with three primary businesses: Comcast Cable, NBCUniversal and Sky. Beginning first-quarter 2023, CMCSA changed its presentation of segment operating results around its two primary businesses, Connectivity & Platforms and Content & Experiences.
Comcast Corporation’s expected earnings growth rate for the current year is 8%. The Zacks Consensus Estimate for current-year earnings has improved 3.1% over the past 60 days. CMCSA presently carries a Zacks Rank #2.
Warner Music Group Corp. is a music-based content company. WMG’s operating segments consist of Recorded Music and Music Publishing. The Recorded Music segment is involved in the discovery and development of recording artists. The Music Publishing segment owns and acquires rights. Warner Music Groupoperates principally in the United States, the United Kingdom and internationally.
Warner Music Group’s expected earnings growth rate for the current year is 23.8%. The Zacks Consensus Estimate for current-year earnings has improved 5.7% over the past 60 days. WMG presently has a Zacks Rank #2.
The RealReal, Inc. operates an online marketplace for consigned luxury goods. REAL offers resale product categories, including women's, men's, kids', jewelry and watches, as well as home and art products.
The RealReal’s expected earnings growth rate for the current year is 39.9%. The Zacks Consensus Estimate for current-year earnings has improved 17.1% over the past 60 days. REAL currently has a Zacks Rank #2.
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4 Solid Stocks to Buy as Inflation Continues to Cool
Markets rallied in November and the upbeat sentiment has continued into December as investors sentiment remains upbeat on signs of cooling inflation. The Bureau of Labor Statistics reported on Dec 12 that inflation eased further in November.
Also, the Federal Reserve kept interest rates unaltered in its December policy meeting on Wednesday and hinted at implementing rate cuts in 2024. Given this situation, investing in consumer discretionary stocks like Virco Mfg. Corporation (VIRC - Free Report) , Comcast Corporation (CMCSA - Free Report) , Warner Music Group Corp. (WMG - Free Report) and The RealReal, Inc. (REAL - Free Report) would be an ideal choice.
Inflation Cools Further
The Consumer Price Index (CPI) rose 3.1% year over year in November, lower than October’s jump of 3.2% and in line with economists’ expectations, the Bureau of Labor Statistics reported on Dec 12.
On a month-over-month basis, CPI increased 0.1% in November. Core CPI, which excludes the volatile food and energy prices, increased 0.3% month over month in November. Core CPI rose 4% year over year.
The decline in November inflation can be attributed to a 2.3% drop in energy prices, as gasoline prices dipped 6%, while oil prices fell 2.7%.
Also, the producer price index (PPI) for final demand increased just 0.9% in November compared to a jump of 1.2% in October.
Year over year, Core PPI rose 2% in November, lower than October’s reading of a rise of 2.4% and economists’ expectations of 2.2%. Month over month, the Core PPI remained unchanged for the second straight month.
Although inflation is still higher than the Federal Reserve’s target of 2%, it has continued to move in the preferred direction for the Fed.
This came as the Fed on Dec 13 kept its benchmark policy rate unchanged in the range of 5.25-5.5% for the third straight time after hiking rates by 525 basis points since March 2022.
Fed Chair Jerome Powell said that he believes that the central bank’s benchmark policy rate is now at its peak and it doesn’t plan to keep interest rates high for too long.
Although the Fed didn’t give a specific time for the first rate cut, market participants believe that it could happen as early as May. The Fed had earlier revised its rate cut forecast to two from four in 2024, with the first cut not coming before September.
Lower borrowing costs definitely bode well for the economy and the present situation indicates a softer landing for the economy. The positive data comes during the peak of the holiday season when people tend to spend lavishly.
Our Choices
Therefore, from an investment perspective, we have identified four stocks from the consumer discretionary sector that are likely to capitalize on reduced inflationary pressure. Each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Virco Mfg. Corporation designs, produces and distributes quality furniture for the contract and education markets worldwide. Examples of facilities served by VIRC include public and private schools, colleges and universities, convention centers, federal and state institutions, churches and other businesses. Virco Mfg also sells to wholesalers, distributors, retailers and catalog retailers.
Virco Mfg’s expected earnings growth rate for the current year is 32.4%. The Zacks Consensus Estimate for current-year earnings has improved 20.5% over the past 60 days. VIRC currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Comcast Corporation is a global media and technology company with three primary businesses: Comcast Cable, NBCUniversal and Sky. Beginning first-quarter 2023, CMCSA changed its presentation of segment operating results around its two primary businesses, Connectivity & Platforms and Content & Experiences.
Comcast Corporation’s expected earnings growth rate for the current year is 8%. The Zacks Consensus Estimate for current-year earnings has improved 3.1% over the past 60 days. CMCSA presently carries a Zacks Rank #2.
Warner Music Group Corp. is a music-based content company. WMG’s operating segments consist of Recorded Music and Music Publishing. The Recorded Music segment is involved in the discovery and development of recording artists. The Music Publishing segment owns and acquires rights. Warner Music Groupoperates principally in the United States, the United Kingdom and internationally.
Warner Music Group’s expected earnings growth rate for the current year is 23.8%. The Zacks Consensus Estimate for current-year earnings has improved 5.7% over the past 60 days. WMG presently has a Zacks Rank #2.
The RealReal, Inc. operates an online marketplace for consigned luxury goods. REAL offers resale product categories, including women's, men's, kids', jewelry and watches, as well as home and art products.
The RealReal’s expected earnings growth rate for the current year is 39.9%. The Zacks Consensus Estimate for current-year earnings has improved 17.1% over the past 60 days. REAL currently has a Zacks Rank #2.