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Chicago, IL – January 17, 2025 – 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, Carnival Corporation & plc CCL, The Walt Disney Co. DIS, Dolby Laboratories, Inc. DLB, Royal Caribbean Cruises Ltd. RCL and Ralph Lauren Corp. RL.
Here are highlights from Friday’s Analyst Blog:
5 Discretionary Stocks to Buy as Inflation Shows Signs of Slowing
Rising inflation over the past few months has raised concerns among investors that the Federal Reserve could slow its pace of interest rate cuts this year. This has led to a shaky start for markets in 2025. However, major indexes rebounded on Wednesday as fresh data showed that the annual inflation rate slowed marginally, while the monthly rise was still under control.
Overall, despite a slight rise, inflation closed December on a better note. Given this positive sentiment, investing in consumer discretionary stocks like Carnival Corporation & plc, The Walt Disney Co., Dolby Laboratories, Inc., Royal Caribbean Cruises Ltd. and Ralph Lauren Corp. would be prudent. Each of the stocks has a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Inflation Slows in December
The Commerce Department said on Wednesday that the consumer price index (CPI), the prices people pay for goods and services, rose 0.4% sequentially in December, slightly higher than analysts’ expectations of a rise of 0.3%. On a year-over-year basis, CPI rose 2.9%, which came in line with the consensus estimate.
Core CPI, which excludes the volatile food and energy costs, rose 0.2% sequentially in December, 0.1% lower than the consensus estimate. Year over year, CPI rose 3.2% in December, better than economists’ expectations of a jump of 3.3%. A 2.6% increase in energy prices, fueled by a 4.4% jump in gasoline prices, was responsible for nearly 40% of the index’s gain.
Markets Rally on Slowing Inflation
All major indexes rallied following the release of the data. The Dow, the S&P 500 and the Nasdaq rose 1.7%, 1.8% and 2.5%, respectively, to record their best day since Nov. 6, when Donald Trump won the U.S. Presidential election.
Markets rallied last year after Trump’s win but lost steam in the final weeks of December, with the Santa Claus rally failing to materialize due to concerns over rising inflation. The Federal Reserve initiated its interest rate cut cycle in September and has so far slashed rates by 100 basis points after inflation declined sharply in the second and third quarters of 2024.
Concerns grew that the Federal Reserve could slow or halt its interest rate cuts after inflation rose in October and November. The fears had been taking a toll on stocks. However, signs of inflation slowing in December have alleviated some of the worries. Although markets are pricing in a 97.3% chance of the Fed keeping interest rates unaltered in its January meeting, 55.2% are hopeful of a rate cut in May, which was less than 50% a couple of days back.
Given the rebound in optimism, it would be ideal to invest in consumer discretionary stocks. The Consumer Discretionary Select Sector SPDR (XLY) has gained 30.7% in the past year and 18.8% in the last six months compared to the S&P 500 Index’s growth of 24.4% and 5.7%, respectively.
5 Consumer Discretionary Stocks With Growth Potential
Carnival Corporation & plc
Carnival Corporation & plc operates as a cruise and vacation company. As a single economic entity, CCL forms the largest cruise operator in the world. It is the world’s leading leisure travel firm and carries nearly half of the global cruise guests.
Carnival Corporation’s expected earnings growth rate for the current year is 24.7%. The Zacks Consensus Estimate for current-year earnings improved 3.6% over the last 60 days. CCL currently carries a Zacks Rank #2.
The Walt Disney Company
The Walt Disney Company has assets that span movies, television shows and theme parks. Revenues were $91.4 billion in fiscal 2024. DIS’ fourth-quarter fiscal 2024 results reflect growth in Disney+ subscribers and Media and Entertainment Distribution businesses. Domestic theme park and resort businesses gained due to guest spending growth attributable to increases in per capita guest spending at theme parks and cruise lines.
The Walt Disney Company’s expected earnings growth rate for the current year is 8.9%. The Zacks Consensus Estimate for current-year earnings improved 1.7% over the last 60 days. DIS presently has a Zacks Rank #2.
Dolby Laboratories
Dolby Laboratories, Inc. develops audio and imaging technologies that revolutionize entertainment for user-generated content, TV shows, films, music, and gaming. A majority of DLB’s revenues are derived from the licensing of audio technologies. Dolby Laboratories operates on various licensing models including a two-tier model, an integrated licensing model, a patent licensing model, recoveries and collaboration arrangements.
Dolby Laboratories’ expected earnings growth rate for the current year is 6.9%. The Zacks Consensus Estimate for current-year earnings has improved 6% over the past 60 days. DLB currently carries a Zacks Rank #2.
Royal Caribbean Cruises
Royal Caribbean Cruises Ltd. 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 brand TUI Cruises. Royal Caribbean Cruises’ cruise 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 72.1%. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the past 60 days. RCL currently has a Zacks Rank #1.
Ralph Lauren
Ralph Lauren Corp. is a major designer, marketer and distributor of premium lifestyle products in North America, Europe, Asia and internationally. RL offers products in apparel, footwear, accessories, home furnishings, and other licensed product categories.
Ralph Lauren’s expected earnings growth rate for the current year is 14%. The Zacks Consensus Estimate for the current-year earnings has improved 0.3% over the past 60 days. RL currently carries a Zacks Rank #2.
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Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Previewreports. If you want an email notification each time Sheraz publishes a new article, please click here>>>
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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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