U.S. consumer sentiment has been improving as recent data has indicated easing inflation over the past three months. Soaring inflation has compelled people to spend cautiously and the Fed’s aggressive rate hike policy has been igniting fears of a recession.
However, the apprehensions have been waning lately, with commodity prices showing signs of cooling, which has been giving a boost to consumer sentiment. Given this scenario, stocks like InterContinental Hotels Group PLC IHG, Sportradar Group AG SRAD, OneSpaWorld Holdings Limited OSW and Six Flags Entertainment Corporation SIX are likely to benefit in the near term.
Consumer Sentiment Rebounding
The University of Michigan’s preliminary February reading of the consumer sentiment index increased to 66.4 from January’s reading of 64.9. This is the index’s highest reading since January 2022.
January’s consumer sentiment reading also came in higher than economists’ expectations of 65.0.
The index measuring current economic conditions also increased to 72.6 in February from 68.4 in January, indicating a significant improvement in consumers’ views of the state of the economy.
Understandably, consumers are more optimistic about the economy right now. The consumer sentiment index hit a low of 50.0 in June 2022 and has since rebounded substantially. Colling commodity prices have brought in a sigh of relief for consumers. Also, data shows that inflation has been easing over the past three months.
The rally in the stock market and the ongoing strength of the labor market may have spurred the improvement in consumer sentiment. This has raised hopes that the economy may have a softer landing in 2023 and ultimately avoid slipping into recession.
Also, the U.S. GDP grew 2.9% in the fourth quarter for the second consecutive quarter. Besides, the Fed increased interest rates by 25 basis points in February after increasing them by 50 basis points in December. These came after the central bank hiked interest rates by 75 basis points for the fourth time last year.
The two-consecutive lower rate hikes are an indication that the Fed also believes that inflation is easing and it can now achieve its target level with smaller rate increases. Also, a record number of jobs were added to the economy in January and wages are still on the rise, which is giving people the power to purchase.
Given this scenario, it would be wise to invest in these four stocks. Each of the 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.
InterContinental Hotels Group PLC offers information and reservations capability on the Internet for InterContinental Hotels & Resorts, Crowne Plaza Hotels & Resorts, Holiday Inn hotels, Holiday Inn Express hotels, and Staybridge Suites by Holiday Inn hotels. IHG has franchises and also leaves hotels in Europe, Asia, the Americas, the Middle East, Africa, and Greater China.
InterContinental Hotels Group’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 2.5% over the past 60 days. IHG currently carries a Zacks Rank #2.
Sportradar Group AG is a provider of sports betting and sports entertainment products and services. SRAD is based in New York.
Sportradar Group’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 6.3% over the past 60 days. SRAD presently has a Zacks Rank #2.
OneSpaWorld Holdings Limited is a provider and innovator in the fields of wellness, beauty, rejuvenation and transformation on cruise ships and on land. OSW’s service includes traditional and alternative massage, body and skincare treatment options, ayurvedic treatments, comprehensive hair and nail services, fitness, acupuncture, herbal medicine, pain management and medi-spa.
OneSpaWorld Holdings Limited expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 38.9% over the past 90 days. OSW currently sports a Zacks Rank #1.
Six Flags Entertainment Corporation owns and operates regional parks. SIX has parks comprising theme, water and zoological parks offering rides, water attractions, themed areas, concerts, shows, restaurants, game venues and retail outlets.
Six Flags Entertainment’s expected earnings growth rate for next year is 41.2%. Shares of SIX have gained 20.9% over the past three months. Currently, SIX has a Zacks Rank #2.
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