5 Consumer Discretionary Stocks to Buy on September Job Data
On Oct 6, the Department of Labor reported that the U.S. economy added 336,000 jobs in September, well above the consensus estimate of 200,000, marking the highest monthly recruitment since January.
Sector-wise, Leisure and Hospitality added maximum jobs in September with the recruitment of more than 96,000 manpower. Within this sector, Bars and Restaurants was the largest industry with an addition of 61,000 jobs.
We expect this trend to continue for the rest of 2023 as the ongoing quarter is characterized as the holiday season. We believe that U.S. leisure and hospitality businesses will continue to thrive in 2023 after an impressive turnaround last year. Sales of these businesses have not been impacted much despite severe inflationary pressure.
Our Top Picks
We have narrowed our search to five leisure and hospitality stocks that have strong growth potential for the rest of 2023. These stocks have seen positive earnings estimate revision in the last 60 days. Each of our picks carries either a Zacks Rank # 1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks in the past three months.
Image Source: Zacks Investment Research
Live Nation Entertainment Inc. LYV is benefiting from pent-up demand for live events, robust ticket sales and the sponsorship and advertising business. LYV remains optimistic about its growth prospects in 2023.
For concerts, LYV stated that it has already sold more than 117million tickets (as of June 2023), up 20% from the 2022 levels. In terms of tickets, LYV is likely to benefit from the market pricing trend. Also, the emphasis on new client and venue additions bodes well.
Zacks Rank #1 Live Nation Entertainment has an expected revenue and earnings growth rate of 21.3% and 57.8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 16.1% over the last 60 days.
Carrols Restaurant Group Inc. TAST is the largest BURGER KING franchisee in the United States with over 800 restaurants and has operated BURGER KING restaurants since 1976. TAST operates as a Burger King and Popeyes franchisee.
Zacks Rank #1 Carrols Restaurant Group has an expected revenue and earnings growth rate of 8.1% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the last 60 days.
El Pollo Loco Holdings Inc. LOCO develops, franchises, licenses and operates quick-service restaurants under the name El Pollo Loco. LOCO specializes in flame-grilled chicken in a variety of contemporary Mexican-influenced entrees, including specialty chicken burritos, chicken quesadillas, chicken tortilla soup, Pollo Bowls and Pollo Salads.
Zacks Rank #2 El Pollo Loco Holdings has an expected revenue and earnings growth rate of 0.9% and 25.9%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 5.8% over the last 60 days.
Hilton Worldwide Holdings Inc.’s HLT performance was attributable to the upward trend in travel and tourism. HLT benefits from its focus on unit expansion, hotel conversions, strategic partnerships and loyalty programs. HLT expects positive development trends to continue on the back of new development and conversion opportunities. For third-quarter 2023, management anticipates system-wide RevPAR to increase in the 4-6% band on a year-over-year basis.
Zacks Rank #2 Hilton Worldwide Holdings has an expected revenue and earnings growth rate of 14.8% and 23.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 30 days.
Caesars Entertainment Inc. CZR is benefiting from pent-up consumer demand, strong digital segment performance and improved marketing capabilities. Also, CZR’s focus on sports-betting expansion and property development bodes well. To drive growth, CZR emphasized product enhancements, including cash-out speed, customer service, parlay, and alternative line offerings.
Zacks Rank #2 Caesars Entertainment has an expected revenue and earnings growth rate of 7.2% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the last seven days.
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Carrols Restaurant Group, Inc. (TAST) : Free Stock Analysis Report
Live Nation Entertainment, Inc. (LYV) : Free Stock Analysis Report
Caesars Entertainment, Inc. (CZR) : Free Stock Analysis Report
Hilton Worldwide Holdings Inc. (HLT) : Free Stock Analysis Report
El Pollo Loco Holdings, Inc. (LOCO) : Free Stock Analysis Report
