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The Zacks Analyst Blog Highlights Netflix, Royal Caribbean Cruises, Roblox, Skechers and SharkNinja

For Immediate Releases

Chicago, IL – June 13, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Netflix Inc. NFLX, Royal Caribbean Cruises Ltd. RCL, Roblox Corp. RBLX, Skechers U.S.A. Inc. SKX and SharkNinja Inc. SN.

Here are highlights from Wednesday’s Analyst Blog:

5 Consumer Discretionary Stocks to Buy Despite Weak Run

Wall Street has moved mostly sideways so far in June after rallying strongly last month. However, the overall performance of U.S. stock markets remains quite exciting. Meanwhile, the consumer discretionary sector, which jumped significantly last year, has failed to maintain its momentum in 2024.

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Out of the 11 broad sectors of the market’s benchmark — the S&P 500 Index — the Consumer Discretionary Select Sector SPDR is down 0.3% year to date. This sector is the second worst performer so far this year after Real Estate Select Sector SPDR, which tumbled 4.7%.

The consumer discretionary sector comprises businesses that sell goods and services that are considered non-essential by consumers. These are the products that consumers can avoid without any major consequences to their well-being. In fact, these goods are desirable only if the available income of an individual is sufficient to purchase them.

Moreover, the sector is generally recognized as being growth-oriented. Notably, growth sectors are highly sensitive to the movement of the market interest rate and are inversely related. In the first half of 2023, the Fed first reduced the magnitude of interest rate hike and finally stopped raising rates in July 2023. Consequently, the consumer discretionary sector flourished.

Since the beginning of this year, market participants are expecting a reduction in the Fed fund rate by 3-4 times of 25 basis points each. However, nothing has happened so far, and the benchmark lending rate has remained static in the range of 5.25-5.5%, marking the 23-year high level, since July 2023.

At present, investors are highly concerned that the Fed may maintain the same range of interest rate throughout 2024. A sticky inflation rate, a resilient labor market, higher wage rates and better-than-expected earnings results have created jitters among Fed members regarding a rate cut. As a result, the consumer discretionary space has been facing hurdles.

Our Top Picks

Despite these headwinds, a handful of consumer discretionary stocks with a favorable Zacks Rank have the potential to provide good returns in the second half of 2024. We have chosen five such large-cap consumer discretionary stocks.

These stocks have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Netflix Inc. added 9.33 million paid subscribers globally in first-quarter 2024, with a rise of 1% in average revenue per subscription. NFLX attributed the robust top-line growth to its paid subscription-sharing offering (part of its password-sharing crackdown), recent price changes and the strength of its business in general.

NFLX is expected to continue dominating the streaming space, courtesy of its diversified content portfolio, which is attributable to heavy investments in the production and distribution of localized and foreign-language content.

Zacks Rank #1 Netflix has an expected revenue and earnings growth rate of 14.8% and 52.2%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 30 days.

Royal Caribbean Cruises Ltd. has been benefiting from strong cruising demand from new and loyal guests and robust booking trends. Moreover, RCL gains from strength in consumer spending onboard and pre-cruise purchases.

RCL emphasized investing in a modern digital travel platform to streamline the vacation booking process for customers and expand wallet share. Also, RCL emphasized new innovative ships and onboard experiences to boost its offering and deliver superior yields and margins.

Zacks Rank #1 Royal Caribbean Cruises has an expected revenue and earnings growth rate of 16.8% and 63.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.6% over the last 30 days.

Roblox Corp. develops and operates an online entertainment platform. RBLX offers Roblox Client, an application that allows users to explore 3D digital worlds, and Roblox Studio, a toolset that allows developers and creators to build, publish and operate 3D experiences and other content. RBLX also provides Roblox Cloud, a solution that provides services and infrastructure to power the human co-experience platform.

Zacks Rank #2 Roblox has an expected revenue and earnings growth rate of 15.9% and 9.1%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 18.7% over the last 30 days.

Skechers U.S.A. Inc. has been strategically broadening its brand range, focusing on comfortable footwear amidst changing lifestyle preferences. SKX’s investments in global infrastructure support both online and offline growth, facilitating better customer interaction through seamless experiences. The wholesale segment of SKX thrives due to efficient inventory management and expansion into international markets.

Strong direct-to-consumer sales reflect successful product innovations and targeted marketing efforts. Skechers plans to further expand its direct sales channels and global presence while investing in new stores. The upwardly revised fiscal 2024 projections following impressive first-quarter performance, align with SKX’s strategic goals.

Zacks Rank #1 Skechers U.S.A. has an expected revenue and earnings growth rate of 10.5% and 16.6%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last seven days.

SharkNinja Inc. is a product design and technology company engaged in the provision of various solutions for consumers worldwide. SN sells its products through traditional brick-and-mortar retail channels and e-commerce channels, distributors, and direct-to-consumer channels under the Shark and Ninja brands.

SN offers cleaning appliances as well as other floorcare products, cooking and beverage appliances, food preparation appliances as well as home environment products comprising air purifiers and humidifiers.

Zacks Rank #1 SharkNinja has an expected revenue and earnings growth rate of 11.8% and 18.6%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 6.1% over the last 30 days.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance  for information about the performance numbers displayed in this press release.

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Netflix, Inc. (NFLX) : Free Stock Analysis Report

Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report

Skechers U.S.A., Inc. (SKX) : Free Stock Analysis Report

SharkNinja, Inc. (SN) : Free Stock Analysis Report

Roblox Corporation (RBLX) : Free Stock Analysis Report

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Zacks Investment Research