Inflation is still at multi-year highs but the good sign is that it has been cooling lately. As a result, there has been a slight relief, which has allowed people to spend more freely. At the same time, higher demand for goods has so far helped some major sectors from collapsing under inflationary pressures.

A rise in personal income is aiding spending, although consumer confidence is still low. Also, people are spending more freely on travel, vacations and outdoor entertainment due to an increase in personal income.

Given this situation, investing in consumer discretionary stocks like Wyndham Hotels & Resorts, Inc. WH, Hyatt Hotels Corporation H, Hilton Grand Vacations Inc. HGV and Live Nation Entertainment, Inc. LYV would be ideal.

Personal Income, Personal Spending Increase

The Commerce Department said on Dec 1 that personal spending increased a solid 0.8% in October after rising 0.6%the month before. This came as data showed the personal consumption expenditure (PCE) index rising 0.3% for the month, beating expectations of an increase of 0.4%.

The Fed has been increasing interest rates quite aggressively, but that hasn’t stopped people from spending. The board said that people continued to spend on new automobiles, food products and housing.

Commodity prices have been cooling off lately, which has allowed people to spend more freely. Also, personal income rose 0.7% in October, above economists’ expectations of a rise of 0.4%. This follows a 0.4% jump in personal income in September.

Disposable personal income also rose 0.7% in October after increasing 0.3% in September. Higher personal income is giving people not only the option to save more but also the power to purchase.

Spending Increases Despite High Interest Rates

Last month, the Fed hiked interest rates by 75 basis points for the fourth time in a row. The central bank also indicated that it will continue hiking interest rates as inflation is still at multi-year highs and its target rate of 2% is still a far cry.

However, with inflation cooling off lately, Fed Chair Jerome Powell said on Nov 30 that the Fed could slow down its pace of interest rate hikes as early as December. This definitely is an indication that people will gain more confidence in spending freely in the near term.

Growing economic optimism now appears to have allayed concerns of a recession. Moreover, the board said that households are “heading into the holiday season in fairly good shape.”

The holiday season has started on an impressive note and sales on both Black Friday and Cyber Monday have hit record highs. According to Adobe Analytics, online sales on Cyber Monday hit a record $11.3 billion, increasing 5.8% year over year. Also, Black Friday online sales totaled $9.12 billion, hitting a record high.

The holiday season traditionally sees people spending more on both goods and traveling. According to a Deloitte report, 31% of Americans plan to travel between Thanksgiving and mid-January. This comes despite prices still being quite high.

Our Choices

Given this scenario, it would be wise to invest in these four stocks with a strong online presence. 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 a 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, United States.

Wyndham Hotels & Resorts’ expected earnings growth rate for the current year is 21.5%. The Zacks Consensus Estimate for current-year earnings has improved 5.8% over the past 60 days. WH currently 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’ expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 70.1% over the past 60 days. H presently carries a Zacks Rank #2.

Hilton Grand Vacations Inc. is engaged in the hospitality business. HGV markets and operates vacation ownership resorts. Hilton Grand Vacationsalso manages and serves club membership programs, which include Hilton Grand Vacations Club and The Hilton Club.

Hilton Grand Vacations’ expected earnings growth rate for the current year is 60.9%. The Zacks Consensus Estimate for current-year earnings has improved 19.3% over the past 60 days. HGV currently sports a Zacks Rank #1.

Live Nation Entertainment, Inc. operates as a live entertainment company. LYV operates through the Concerts, Ticketing, and Sponsorship and Advertising segments. The Live Nation Entertainment has more than 580 million fans across all of its concerts and ticketing platforms in 46 countries.

Live Nation Entertainment’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 24.5% over the past 60 days. LYV currently carries a Zacks Rank #2.

Zacks Names “Single Best Pick to Double”

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.

This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.

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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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