For immediate release
Chicago, IL – November 17, 2022 – Zacks.com Announces List of Stocks Featured in Analyst Blog. Every day Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: BJ’s Wholesale Club Holdings Inc. BJ, H&R Block Inc. HRB, Wyndham Hotels & Resorts Inc. WH, Live Nation Entertainment Inc. LYV, and Hyatt Hotels Corp. H.
Here are the highlights from Wednesday’s analyst blog:
Is the peak of inflation behind us? 5 consumer discretionary choices
US stock markets have seen an impressive rally since early October. We are not out of the woods as inflation remains high. However, several recently released figures have clearly shown that inflation is declining, albeit at a slow pace. A gradual decline in the inflation rate is likely to reinforce the ongoing rally in US stock markets.
To combat record inflation, the Fed has adopted an ultra-tight monetary policy. The benchmark lending rate has so far been raised by 3.75% in 2022, and the central bank’s liquidity-squeezing strategy has caused the risk-free market yield to skyrocket. Growth sectors such as consumer discretionary and technology were most affected by the Fed’s hawkish strategy.
As peak inflation appears to be behind us, the Fed is likely to ease its tighter monetary control. This will help the consumer discretionary sector, which is down more than 30% year-to-date. We selected five consumer discretionary stocks with investment-friendly Zacks Ranks. These are – BJ’s Wholesale Club Holdings Inc., H&R Block Inc., Wyndham Hotels & Resorts Inc., Live Nation Entertainment Inc. And Hyatt Hotels Corp.
The peak of inflation appears to be easing
On Nov. 10, the Labor Department reported that the consumer price index (CPI) in October rose 0.4% month-on-month and 7.7% year-on-year. Consensus estimate was for a 0.5% MoM increase and a 7.9% YoY increase
Core CPI (excluding volatile food and energy) increased by 0.3% MoM and 6.3% YoY. The consensus estimate was a 0.5% month-over-month and 6.5% year-over-year increase.
On Nov. 15, the Labor Department reported that the producer price index (PPI) rose 0.2% in October versus the consensus estimate of a 0.5% increase. September data was revised down from 0.4% to 0.2%.
Year-over-year, PPI rose 8% from 8.4% in September. Core PPI rose 0.2% in October versus the consensus estimate of 0.4%. Year-over-year, core PPI rose 5.4% in October.
In the third quarter of 2022, the chain-weighted price index – an index of the cost of living adjusted for consumer behavior – rose by 4.1%, well below the consensus estimate of a 5% increase. 3%. The Personal Consumption Expenditure (PCE) price index increased by 4.2%, showing a sharp decline from 7.3% in the second quarter. The PCE Core Price Index, the Fed’s preferred inflation gauge, climbed 4.5% in the third quarter, in line with market expectations.
Our top picks
We narrowed our search to five consumer discretionary stocks that have strong potential for the remainder of 2022. These stocks have seen positive revisions to earnings estimates over the past 30 days. Each of our picks carries a Zacks Rank #2 (Buy). you can see the complete list of today’s Zacks #1 Rank (Strong Buy) stock here.
Wholesale BJ ClubThe ability to manage the challenging retail environment validates its strong customer value proposition and business model. BJ’s relentless efforts to grow its member base, streamline assortments, improve digital capabilities, and accelerate club openings should support sales. We expect sustained improvement in dues revenue as new club openings increase.
It is clear that Burris Logistics’ acquisition of BJ’s Wholesale Club’s perishables supply chain puts it in an advantageous position to expand its supply chain capabilities and expand its fresh food offering. A 6% jump in member numbers in Q2 speaks to BJ’s ability to drive traffic. We estimate a 14.3% and 7.1% increase in total revenues in fiscal 2022 and 2023, respectively.
BJ’s Wholesale Club projects an expected earnings growth rate of 12% for the current year (through January 2023). Zacks’ consensus estimate for full-year earnings improved 11.1% over the past seven days.
H&R block it is well poised to capitalize on its five-year strategy known as Block Horizons. HRB is expected to deliver sustainable revenues, operating profit growth and solid returns on investment while maintaining a strong balance sheet and cash position for the foreseeable future.
The key drivers of H&R Block’s post-pandemic performance will be digital enablement of the business, customer addition and retention in both Assisted and DIY, increased use of AI, along with machine learning for business improvement product and expansion into small businesses.
H&R Block expects an expected earnings growth rate of 9.4% for the current fiscal year (ending June 2023). Zacks’ consensus estimate for the current fiscal year improved 10.5% in the past 30 days.
Live Nation Entertainment benefited from pent-up demand for live events and robust ticket sales. These, coupled with increased demand for digital ticketing and contactless transactions, have likely contributed to the upside.
LYV remains optimistic about its growth prospects in 2022 and 2023. The emphasis on cost-saving efforts bodes well. For concerts, Live Nation Entertainment said it has already sold more than 100 million tickets for shows in the second half of 2022 and 2023. LYV is likely to benefit from the OCESA acquisition.
Live Nation Entertainment expects an earnings growth rate of more than 100% for the current year. Zacks’ consensus estimate for year-to-date earnings improved 24.5% in the past 30 days.
Hyatt hotels it benefited from solid transitional demand for leisure, the easing of travel restrictions and increased airline capacity. Additionally, the focus on new hotel openings and acquisition initiatives bodes well.
As people return to the office and resume further cross-border travel, H remains optimistic about the recovery in business transient and its continued momentum into the second half of the year.
Hyatt Hotels has an expected earnings growth rate of greater than 100% for the current year. Zacks’ consensus estimate for the year has improved 70.1% in the past 30 days.
wyndham operates as a hotel franchisor mainly in Canada, Mexico, Colombia, Ecuador, Turkey, Germany, United Kingdom, the Caribbean and Margarita Island in Venezuela. WH operates through the Hotel Franchising and Hotel Management segments.
The Hotel Franchising segment licenses its lodging brands and provides related services to third-party hotel owners and others. The Hotel Management segment provides hotel management services for full-service and limited-service hotels.
Wyndham has a projected earnings growth rate of 21.5% for the current year. Zacks consensus estimate for full-year earnings improved 5.8% in the past 7 days.
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Hyatt Hotels Corporation (H): Complimentary Inventory Analysis Report
BJ’s Wholesale Club Holdings, Inc. (BJ): Free Stock Analysis Report
H&R Block, Inc. (HRB): Free Stock Analysis Report
Live Nation Entertainment, Inc. (LYV): Free Stock Analysis Report
Wyndham Hotels & Resorts (WH): Complimentary Inventory Analysis Report
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