Consumer Confidence to Remain Robust in 2024: 4 Must-Buy Stocks

U.S. consumer confidence registered a bigger-than-expected jump in December, per the latest report from The Conference Board. The much-viewed Consumer Confidence Index hit 110.7 in the current month, significantly rising from a downwardly revised figure of 101.0 in November. The Present Situation Index rose to 148.5 from 136.5 in November.

More importantly, American consumers are feeling more secure about their prospects over the next six months, as the Expectations Index jumped to 85.6 in December, much better than November’s downwardly revised figure of 77.4. This significantly reduces the threat of an impending recession in the near term, as a reading below 80 generally indicates a recession.

Cooling Inflation to Aid Rate Cuts

Federal Reserve’s heightened series of rate hikes, escalating from record-low levels in March 2022 to the current 5.25-5.50%, impacted growth-oriented companies, and small and medium-sized businesses.

However, at its Dec 13 meeting, the Federal Reserve kept the interest rate steady for the third straight time and signaled multiple rate cuts in 2024 due to slowing inflation.

Federal Reserve is expected to keep a vigil on the inflation gauge before going for any cuts. It expects core inflation to decline to 3.2% in 2023, 2.4% in 2024 and 2.2% in 2025. Inflation is expected to hit the Federal Reserve’s 2% target in 2026.

High Consumer Confidence to Aid Stocks

The impressive jump in consumer confidence, both current and near term, reflects the benefits of cooling inflation and hopes of at least three rate cuts by the U.S. Federal Reserve in 2024. This, along with strong retail sales (up 0.3% in November) and lower weekly jobless claims (down 19K per the Dec 14 release), reflects the resiliency of the U.S. economy.

According to National Retail Federation data, holiday spending is expected to grow 3-4% over 2022, which is consistent with the average annual holiday increase of 3.6% between 2010 and 2019.

In fact, higher consumer spending buoys GDP growth. Per a survey conducted by the Federal Reserve Bank of Philadelphia, on an annual-average-over-annual-average basis, real GDP is expected to increase 2.4% in 2023 and 1.7% in 2024. These annual projections are 0.3% and 0.4% higher than the estimates in the previous survey.

Despite chances of a bumpy ride in the first half of 2024, U.S. consumer confidence is expected to remain robust on the aforementioned factors. This presents strong growth opportunities for consumer discretionary and retail stocks in 2024.

Our Picks

Here, we select four stocks — Royal Caribbean Cruises RCL, Live Nation LYV, Deckers Outdoor DECK and Amazon.com AMZN — which are well-positioned to benefit from robust consumer confidence in 2024.

Each of the above-mentioned companies currently sports a Zacks Rank #1 (Strong Buy) and has a market cap of more than $10 billion. You can see the complete list of today’s Zacks #1 Rank stocks here.

One-Year Performance

 

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Image Source: Zacks Investment Research

 

Miami-based Royal Caribbean owns and operates three global brands — Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises. The company has been benefiting from solid demand for cruising and acceleration in booking volumes. Also, the emphasis on strong pricing (on closer-in-demand) bodes well. RCL stated that the momentum has continued into 2024, with booked load factors and rates surpassing those of all previous years.

The Zacks Consensus Estimate for Royal Caribbean’s 2024 earnings is pegged at $9.10 per share, rising 9.4% over the past 60 days.

Beverly Hills, CA-based Live Nation operates as a live entertainment company. LYV has been benefiting from the pent-up demand for live events, robust ticket sales, and the sponsorship and advertising business. The emphasis on new client and venue additions bodes well.

The Zacks Consensus Estimate for Live Nation’s 2024 earnings is pegged at $2.40 per share, increasing 38% over the past 60 days.

Headquartered in Goleta, CA, Deckers Outdoor is a leading designer, producer and brand manager of innovative, niche footwear, and accessories developed for outdoor sports and other lifestyle-related activities. It sells products primarily under proprietary brands — UGG, HOKA, Teva, Sanuk and Other brands (mainly comprised of Koolaburra).

Deckers is riding on strong gains from the direct-to-consumer channels, brand growth and a stable operating model. Solid momentum in its global wholesale business, driven by robust consumer demand in the domestic and international markets, bodes well for prospects.

The consensus mark for fiscal 2024 earnings has increased 5% over the past 30 days to $26.58 per share.

Amazon is gaining on solid Prime momentum, owing to ultra-fast delivery services and a strong content portfolio. Strengthening relationships with third-party sellers is a positive. Additionally, the strong adoption rate of AWS is aiding the company’s cloud dominance. The expanding AWS services portfolio is continuously helping Amazon gain further momentum among its customers.

The Zacks Consensus Estimate for AMZN’s 2024 earnings is pegged at $3.55 per share, rising 15.3% over the past 60 days.

Zacks Naming Top 10 Stocks for 2024

Want to be tipped off early to our 10 top picks for the entirety of 2024?

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From 2012 (when our Director of Research, Sheraz Mian assumed responsibility for the portfolio) through November, 2023, the Zacks Top 10 Stocks gained +974.1%, nearly TRIPLING the S&P 500’s +340.1%. Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2024. Don’t miss your chance to get in on these stocks when they’re released on January 2.

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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report

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

Deckers Outdoor Corporation (DECK) : Free Stock Analysis Report

Live Nation Entertainment, Inc. (LYV) : Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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