5 Must-Buy Stocks as Federal Reserve Reassures Multiple Rate Cuts
The U.S. economy is on solid ground and is poised to flourish as fears of a recession are fast fading. The Federal Reserve also reassured Americans that rate cuts are on the anvil, which is going to boost the economy further.
The Federal Reserve left interest rates unchanged in its March FOMC meeting last week in its current range of 5.25-5.5%. The central bank has now left interest rates unchanged since July 2023 after hiking it by 525 basis points in March 2022.
The Fed’s decision was widely expected as it had earlier signaled that the rate hike campaign is nearing its end. Inflation rose slightly in the first two months of the year and is around 3.2%. This raised fears that the Federal Reserve could delay its projected rate cuts by a longer period.
Although inflation is still above the Federal Reserve’s 2% target, it has declined sharply from its peak of 9.1% in June 2022. The Federal Reserve last week said that it still plans to go ahead with at least three 25-basis point rate cuts by the end of 2024.
The Federal Reserve’s positive outlook was cheered by the investors and sent stocks on a rally, with all three major indexes clocking their best weekly gains this year. The Dow, the S&P 500 and the Nasdaq ended the week 2%, 2.3% and 2.9% higher, respectively.
Market participants are now pricing in a 75% possibility that the Federal Reserve would go for the first rate cut in June, according to the CME FedWatch Tool. The probability was 56% before Fed Chairman Jerome Powell’s post-FOMC statement.
Also, the U.S. economy expanded at an annualized pace of 3.3% in the fourth quarter of 2023 and grew 2.5% last year, which shows the underlying strength of the economy.
Our Choices
We have narrowed our search to five consumer discretionary stocks such as American Woodmark Corporation AMWD, Crocs, Inc. CROX, Hyatt Hotels Corporation H,Netflix, Inc. NFLX and Ralph Lauren Corporation RL, which have strong potential for 2024.
These stocks have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
American Woodmark Corporation is the third-largest manufacturer of kitchen and bath cabinets. Offering more than 340 cabinet lines in a wide variety of designs, materials and finishes, AMWD products are sold through a network of dealers and distributors, and directly to home centers and major homebuilders.
American Woodmark’sexpected earnings growth rate for the current year is 14.4%. The Zacks Consensus Estimate for the current-year earnings has improved 3% over the past 60 days. AMWD currently sports a Zacks Rank #1.
Crocs, Inc. is one of the leading footwear brands with its focus on comfort and style. CROX offers a wide variety of footwear products, including sandals, wedges, flips and slides that cater to people of all ages.
Crocs’ expected earnings growth rate for the current year is 2.9%. The Zacks Consensus Estimate for current-year earnings has improved 3.8% over the past 60 days. CROX presently has a Zacks Rank #2.
Hyatt Hotels Corporation is a leading global hospitality company engaged in the development, ownership, operation, management, franchising and licensing of a portfolio of properties, including hotels, resorts and residential and vacation ownership properties around the world. As of Mar 31, 2022, H’s portfolio included more than 1,150 properties in 71 countries across six continents.
Hyatt Hotels Corporation’s expected earnings growth rate for the current year is 27%. The Zacks Consensus Estimate for current-year earnings has improved 17.8% over the past 60 days. H presently carries a Zacks Rank #2.
Netflix, Inc. is considered a pioneer in the streaming space. NFLX has been spending aggressively on building its portfolio of original shows. This is helping Netflix sustain its leading position despite the launch of new services like Disney+ and Apple TV+, as well as existing services like Amazon Prime Video.
Netflix’s expected earnings growth rate for the current year is 41.4%. The Zacks Consensus Estimate for the current-year earnings has improved 5.8% over the past 60 days. NFLX currently sports a Zacks Rank #1.
Ralph Lauren Corporation 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 22.7%. The Zacks Consensus Estimate for the current-year earnings has improved 8.1% over the past 60 days. RL currently sports a Zacks Rank #1.
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Netflix, Inc. (NFLX) : Free Stock Analysis Report
Hyatt Hotels Corporation (H) : Free Stock Analysis Report
Ralph Lauren Corporation (RL) : Free Stock Analysis Report
American Woodmark Corporation (AMWD) : Free Stock Analysis Report
Crocs, Inc. (CROX) : Free Stock Analysis Report
