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U.S. stock markets finished a tumultuous first quarter of 2025. Uncertainty regarding the Trump administration’s tariffs and trade policies and their impact on the U.S. economy, especially on an already-elevated inflation rate and the Fed’s relatively hawkish statement about future interest rate cuts, rattled market participants’ sentiments. Investors also remained highly concerned about a near-term recession.
Consequently, growth sectors like consumer discretionary, technology, communication services and cryptocurrencies suffered the most. This was exactly in contrast to last year when Wall Street saw an impressive northward journey and the Fed cut the benchmark interest rate by 1%.
This year, growth sectors have suffered the most. The Consumer Discretionary Select Sector SPDR (XLY), one of the 11 broad sectors of Wall Street’s benchmark — the S&P 500 Index — has declined the most by 12% in the past three months.
Despite the bloodbath of the sector, we have identified five stocks from this space with a favorable Zacks Rank for near-term investing. These are Royal Caribbean Cruises Ltd. RCL, Ralph Lauren Corp. RL, Fox Corp. FOXA, News Corp. NWSA and Sportradar Group AG SRAD. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart below shows the price performance of our five picks year to date.
Image Source: Zacks Investment Research
Royal Caribbean Cruises is benefiting from strong cruising demand from new and loyal guests and robust booking trends. Also, strength in consumer spending onboard and pre-cruise purchases bodes well.
RCL emphasized investing in a modern digital travel platform to streamline the vacation booking process for its customers and expand wallet share. RCL expresses optimism regarding the prospects of private destinations and anticipates it as a key driver of growth in the upcoming periods.
Royal Caribbean Cruises has an expected revenue and earnings growth rate of 9% and 26.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% in the last seven days.
Ralph Lauren has been benefiting from strong brand equity, a diversified growth strategy and its Next Great Chapter: Accelerate plan. In the last reported quarter, RL’s revenue growth was fueled by a strong direct-to-consumer channel, showcasing its ability to engage consumers directly.
Strategic brand elevation, disciplined inventory management and digital investments have sustained RL’s momentum across retail and wholesale channels. For fiscal 2025, RL expects revenue growth of 6-7% year over year.
Ralph Lauren has an expected revenue and earnings growth rate of 3.7% and 13.5%, respectively, for the current year (ending March 2026). The Zacks Consensus Estimate for current-year earnings has improved 4.9% in the last 60 days.
Fox is gaining from a rise in Affiliate fees, driven by growth in the Television and Cable Network Programming segments. Continued digital monetization at FOX News Media and the impact of additional live events and studio shows at FOX Sports are key growth drivers for Fox’s ad revenues. Higher political ad revenues at the FOX Television Stations continue to strengthen pricing across FOXA’s news and sports brands.
The FOX Network primetime lineup, which includes The Masked Singer, is popular among 18 to 49-year-old audiences and an important target group for advertisers. Expanding viewership within this audience group is expected to attract more advertisers, thereby driving advertising revenues. FOXA is also trying to strengthen its primetime content.
FOXA has an expected revenue and earnings growth rate of 13.4% and 28.3%, respectively, for the current year (ending June 2025). The Zacks Consensus Estimate for current-year earnings has improved 0.5% in the last seven days.
News Corp. is benefiting from growing strength in Digital Real Estate Services, Book Publishing and Dow Jones segments. NWSA also remains well positioned to grab the opportunities generated from technology sharing across geographies and businesses, and bundle offerings of enriched content to its consumers and advertising partners.
NWSA is diversifying its revenue streams through strategic acquisitions and operational enhancement. NWSA remained optimistic about its acquisitions of the Oil Price Information Service and Base Chemicals businesses that are likely to enhance Dow Jones’ information services business. Some of the other notable buyouts include Storyful, which discovers, verifies, acquires and distributes video and user-generated content to NWSA’s partners.
FOXA has an expected revenue and earnings growth rate of -13.6% and 41.4%, respectively, for the current year (ending June 2025). The Zacks Consensus Estimate for current-year earnings has improved 8.8% in the last 60 days.
Sportradar Group provides sports data services for the sports betting and media industries in the United Kingdom, the United States, Malta, Switzerland, and internationally. SRAD offers sports data services to the bookmaking under the Betradar brand name, and to the international media industry under the Sportradar Media Services brand name. SRAD offers mission-critical software, data, and content to sports leagues and federations, betting operators, and media companies.
SRAD also provides sports entertainment, gaming, and sports solutions, as well as live streaming solutions for online, mobile, and retail sports betting. In addition, SRAD’s software solutions address the entire sports betting value chain from traffic generation and advertising technology to the collection, processing, and extrapolation of data and odds, as well as to visualization solutions, risk management and platform services.
Sportradar Group has an expected revenue and earnings growth rate of 16.4% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 10.3% over the last 30 days.
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This article originally published on Zacks Investment Research (zacks.com).
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