4 Discretionary Stocks to Buy on Rise in Personal Income
Inflation has been slowing lately, raising hopes that the economy will rebound faster than it was expected. This has also seen consumer sentiment rise to an eight-month high. Also, personal income has been on the rise, allowing people to spend more freely despite inflationary pressures.
A rise in personal income means people can spend more freely on consumer discretionary items and services. Given this situation, investing in consumer discretionary stocks like Wyndham Hotels & Resorts WH, Sportradar Group AG SRAD, OneSpaWorld Holdings Limited OSW and Madison Square Garden Entertainment Corp. MSGE would be ideal.
Personal Income Rises
The Commerce Department said on Jan 27 that personal income in the United States increased 0.2% in December. Although the rise is marginal, the figure is quite attractive given the sky-high prices of commodities.
December’s jump follows a revised 0.3% rise in personal income in November. Disposable personal income, which excludes personal current taxes, increased 0.3% in December, which matched the increase witnessed in November.
This came as the latest data showed inflation slowing in the last month. The Personal Consumption Expenditures (PCE) Price Index decreased to 5% year over year in December from 5.5% in November, according to data released by the U.S. Bureau of Economic Analysis on Jan 27.
Core PCE, the Fed's favored inflation indicator, fell from 4.7% in November to 4.4% in December. Inflation has slowed considerably in the last quarter of 2022, raising hopes among millions that the economy may have a softer landing in 2023 and recession fears have also been somewhat alleviated.
Also, the U.S. GDP grew 2.9% in the fourth quarter for the second straight quarter after declining in the prior two quarters.
Growth in GDP coupled with slowing inflation has seen a jump in consumer sentiment. According to the University of Michigan's survey, consumer sentiment improved 5.2 points to 64.9 in January after rising to 59.7 in December. January’s reading is the highest since April 2022, which once again proves that people are more confident of an economic rebound.
A rise in personal income, will thus, help people spend more confidently now.
Our Choices
Given this scenario, it would be wise to invest in these four consumer discretionary 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.
Wyndham Hotels & Resorts, Inc. provides hotel and resort chain. WH operates primarily in Canada, Mexico, Colombia, Ecuador, Turkey, Germany, the UK, the Caribbean and Margarita Island in Venezuela. Wyndham Hotels and Resorts is headquartered in New Jersey.
Wyndham Hotels & Resorts’ expected earnings growth rate for the current year is 22.5%. The Zacks Consensus Estimate for current-year earnings has improved 0.8% over the past 60 days. WH currently has a Zacks Rank #2.
Sportradar Group AG offers sports data services to the media and sports betting sectors in the UK, the United States, Malta, Switzerland, and other countries. SRAD offers sports data services to the bookmaking industry under the brand Betradar and to the global media sector under the brand Sportradar Media Services.
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 0.1% over the past 60 days. SRAD currently 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 60 days. OSW currently sports a Zacks Rank #1.
Madison Square Garden Entertainment Corp. provides entertainment experiences. MSGE presents or hosts events in its diverse collection of venues: New York's Madison Square Garden, Hulu Theater at Madison Square Garden, Radio City Music Hall and Beacon Theatre; the Forum in Inglewood, CA and The Chicago Theatre.
Madison Square Garden Entertainment’s expected earnings growth rate for the current year is 65.6%. Shares of MSGE have gained 7.5% in the past 30 days. Madison Square Garden Entertainment currently has a Zacks Rank #2.
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Wyndham Hotels & Resorts (WH) : Free Stock Analysis Report
OneSpaWorld Holdings Limited (OSW) : Free Stock Analysis Report
Madison Square Garden Entertainment Corp. (MSGE) : Free Stock Analysis Report
Sportradar Group AG (SRAD) : Free Stock Analysis Report
