Americans continue to be confident about the economy as the Federal Reserve gears up to cut interest rates this year. The Conference Board said on Mar 26 that consumer confidence remained largely unchanged in March, with the index dipping slightly to 104.7 from February’s 104.8.

The slight dip can be attributed to the recent jump in inflation. Inflation rose marginally in January and February, raising concerns among consumers. This saw consumers' inflation expectations rise slightly to 5.3% from 5.2% in February.

However, inflation has declined sharply from its peak of 9.1% in 2022 after the Federal Reserve adopted a strict monetary tightening campaign that saw it increasing interest rates by 525 basis points to take its benchmark policy rate in the current range of 5.25-5.5%.

Thus, inflation worries have also faded substantially over the past year. Consumers are now more focused on how and when the Federal Reserve starts its interest rate cuts.

The Federal Reserve last week kept interest rates unchanged in its FOMC meeting. The central bank has now left interest rates steady since July and said last week that it plans at least three rate cuts this year.

Lower interest rates mean lower borrowing costs, which will allow consumers more purchasing power.

Our Choices

We have narrowed our search to four consumer discretionary stocks such as Crocs, Inc. (CROX Quick QuoteCROX - Free Report) , Royal Caribbean Cruises Ltd. (RCL Quick QuoteRCL - Free Report) , Reynolds Consumer Products Inc. (REYN Quick QuoteREYN - Free Report) and American Woodmark Corporation (AMWD Quick QuoteAMWD - Free Report) , which have strong potential for 2024. These stocks have seen positive earnings estimate revisions in the past 60 days. Each of our picks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.   

Crocs is one of the leading footwear brands with its focus on comfort and style. CROX offers a wide variety of footwear products, including sandals, wedges, flips and slides, which cater to people of all ages.

Crocs’ expected earnings growth rate for the current year is 2.9%. The Zacks Consensus Estimate for current-year earnings has improved 3.8% over the past 60 days. CROX presently has a Zacks Rank #2.

Royal Caribbean Cruises 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 TUI Cruises brand. 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 47.9%. The Zacks Consensus Estimate for current-year earnings has improved 9.4% over the past 60 days. RCL currently sports a Zacks Rank #1.

Reynolds Consumer Products is a consumer-branded and private-label products company. REYN produces and sells branded and store-brand products, which include cooking products, waste & storage products and tableware. Reynolds Consumer Products’flagship products include Reynolds Wrap(R) aluminum foil, Hefty(R) bags, and Hefty(R) party cups.

Reynolds Consumer Productsexpected earnings growth rate for the current year is 13.4%. The Zacks Consensus Estimate for current-year earnings has improved 5.2% over the past 60 days. REYN currently has a Zacks Rank #2.

American Woodmark is the third-largest manufacturer of kitchen and bath cabinets. Offering more than 340 cabinet lines in a wide variety of designs, materials and finishes, AMWD products are sold through a network of dealers and distributors, and directly to home centers and major homebuilders.

American Woodmark’sexpected earnings growth rate for the current year is 14.4%. The Zacks Consensus Estimate for the current-year earnings has improved 3% over the past 60 days. AMWD currently sports a Zacks Rank #1.