For Immediate Release
Chicago, IL – October 3, 2023 – 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: Guess?, Inc. GES, Sonos, Inc. SONO, Bragg Gaming Group Inc. BRAG and Hilton Worldwide Holdings Inc. HLT.
Here are highlights from Monday’s Analyst Blog:
4 Solid Stocks to Buy on Jump in Personal Income Spending
Sky-high prices have been a major concern for more than a year now but that hasn’t stopped consumers from spending as demand for goods and services remains high. The solid spending is being aided by a steady rise in personal income as the labor market, despite softening lately, remains resilient.
Also, the Federal Reserve’s aggressive rate hike policy has seen inflation decline sharply over the past year, which has somewhat cooled commodity prices, giving consumers the confidence to spend more.
Given this situation, investing in consumer discretionary stock like Guess?, Inc., Sonos, Inc., Bragg Gaming Group Inc. and Hilton Worldwide Holdings Inc. is a wise decision.
Personal Income, Spending Rise
The Bureau of Economic Analysis said on Sep 29 that personal income jumped $87.6 billion, rising 0.4% month over month in August after increasing 0.2% in July. Moreover, disposable personal income, which is personal income after paying personal current taxes rose 0.2% in August.
Simultaneously, personal spending also increased 0.4% to $83.6 billion month over month in August.
Personal outlays, which include consumption expenditures, personal interest payments, and current transfer payments, rose a solid $86 billion in August.
The Bureau of Economic Analysis said in its report that personal income rose primarily because of a jump in compensation, rental income, personal income receipts on assets, and proprietor’s income.
Understandably, consumer spending is being driven by higher personal income as inflation continues to decline steadily. The Fed has increased interest rates by 525 basis points since March 2022, taking its benchmark rate to the range of 5.25-5.5%.
This has seen inflation declining to more than half from its peak of 9.1% in June 2022. The personal spending and income data was released on the same day the Commerce Department released the personal consumption expenditure (PCE) index reading for August.
The PCE index, the Fed’s preferred inflation gauge, rose 0.4% month over month in August. However, it was primarily driven by a surge in energy prices. Core PCE, which excludes the volatile food and energy prices, rose a modest 0.1%, less than the consensus estimate of 0.2%, in August.
Year over year, PCE inflation rose 3.5%, while core PCE inflation increased 3.5%, lower than July’s reading of 4.3%.
Consumer spending is likely to get a boost further as the Fed left its interest rates unchanged in September and hinted at only one more hike of a quarter percentage point this year before it goes for rate cuts in 2024.
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). You can see the complete list of today’s Zacks #1 Rank stocks here.
Guess?, Inc. designs, markets, distributes and licenses casual apparel and accessories for men, women and children as per the American lifestyle and European fashion sensibilities. GES’ collection includes contemporary apparel, denim, handbags, eyewear, watches, footwear, and other related consumer products.
Guess’expected earnings growth rate for the current year is 9.9%. The Zacks Consensus Estimate for the current-year earnings has improved 7.1% over the past 60 days. GES currently sports a Zacks Rank #1.
Sonos, Inc. operates as a consumer electronics company that is primarily involved in the manufacturing of smart speakers with immersive sound experiences. SONO leverages evolving consumer technology and entertainment trends to be on par with the audio consumption patterns of customers that are largely characterized by fast-tracked adoption of voice assistants and streaming services.
Sonos’ expected earnings growth rate for the current year is 95.9%. The Zacks Consensus Estimate for the current-year earnings has improved 4.3% over the past 60 days. SONO presently has a Zacks Rank #1.
Bragg Gaming Group Inc. is a gaming technology provider. BRAG’s main portfolio asset is ORYX Gaming, business-to-business i-gaming platform, product aggregator, casino content, managed sportsbook and managed services provider.
Bragg Gaming Group’s expected earnings growth rate for the current year is 111.8%. The Zacks Consensus Estimate for the current-year earnings has improved 100% over the past 60 days. BRAG presently has a Zacks Rank #2.
Hilton Worldwide Holdings Inc. is a hospitality company that owns, leases, manages, develops, and franchises hotels and resorts. As of Dec 31, 2022, HLT’s development pipeline comprised nearly 2,820 hotels, with nearly 416,400 rooms across 118 countries and territories — including 30 countries and territories where it currently has no running hotels.
Hilton Worldwide’s expected earnings growth rate for the current year is 23.7%. The Zacks Consensus Estimate for the current-year earnings has improved 1% over the past 60 days. HLT presently has a Zacks Rank #2.
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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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