After three successive months of decline, confidence among Americans ticked up in November, aided mostly by strong labor market conditions. Expectations for future business circumstances improved despite geopolitical issues, sustained inflation and the likelihood of a recession ahead.
This will undoubtedly strengthen consumer outlay, which surely bodes well for consumer discretionary stocks such as Skechers SKX, Hilton Worldwide HLT and Royal Caribbean Cruises RCL.
Americans Feel Much Better About the Economy
The Conference Board stated that its consumer confidence index increased to 102.0 this month from a downwardly revised 99.1 last month. The consumer confidence index advanced more than analysts’ expectations of 100.9.
Confidence among consumers strengthened as they are now feeling much better about future business scenarios, income and job availability.
The expectations index, which measures consumers’ outlook on business and labor market situation improved to 77.8 in November from October’s reading of 72.7. Now, the reading may be below the 80 mark, indicating a recession shortly, but still, consumers’ economic outlook for the next six months improved.
Even though consumers are preoccupied with the rise in prices, confidence largely among households aged 55 and above increased. After all, they are now much more self-assured about their financial conditions.
Why Does Consumer Confidence Matter?
Confidence among consumers is necessary in evaluating consumer outlays in the upcoming three to six-month period. The more confidence households possess, the more they are likely to open their purses.
From an investment standpoint, when consumers are willing to splurge, companies that sell nonobligatory items and provide hospitality services are likely to profit.
3 Solid Choices
We have, thus, selected three consumer discretionary stocks that flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). Such stocks also boast 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.
Skechers designs, develops, markets and distributes footwear for men, women and children. Skechers has a Zacks Rank #2 and a VGM Score of B.
The Zacks Consensus Estimate for SKX’s current-year earnings has moved up 1.5% over the past 60 days. The company’s expected earnings growth rate for the current year is 44.5%.
Hilton Worldwide is a hospitality company that owns, leases, manages, develops, and franchises hotels and resorts. Hilton Worldwide has a Zacks Rank #2 and a VGM Score of B.
The Zacks Consensus Estimate for HLT’s current-year earnings has moved up 0.5% over the past 60 days. The company’s expected earnings growth rate for the current year is 24.3%.
Royal Caribbean Cruises is a cruise company. Royal Caribbean Cruises has a Zacks Rank #1 and a VGM Score of B.
The Zacks Consensus Estimate for RCL’s current-year earnings has moved up 7.3% over the past 60 days. The company’s expected earnings growth rate for the current year is 187.9%.
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