5 Discretionary Stocks to Grab as Fed Signals More Interest Rate Cuts

Wall Street resumed its rally on Thursday, a day after the Federal Reserve announced a quarter percentage point rate cut. The Dow and the Nasdaq closed at fresh record highs, with investors regaining their confidence as they await more rate cuts this year.

Inflation has eased substantially, and the Federal Reserve, though cautious, raised its GDP forecast for the year. Given the positive sentiment, investing in consumer discretionary stocks would be a wise decision.

Five such stocks are: Boyd Gaming Corporation BYD, Norwegian Cruise Line Holdings Ltd. NCLH, Ralph Lauren Corporation RL, Hasbro, Inc. HAS and Grand Canyon Education, Inc. LOPE. Each of these stocks currently has a Zacks Rank #1 (Strong Buy) and assure good returns. You can see the complete list of today’s Zacks #1 Rank stocks here.

More Rate Cuts to Boost Economy

The Federal Reserve cut its interest rate by 25 basis points at the end of its policy meeting on Wednesday, taking its benchmark policy rate to the range of 4-4.25%. This is the first time the central bank has slashed interest rates this year.

The rate cut was highly anticipated, given the growing concerns over a struggling labor market and a slowing economy. Latest data showed that job additions to the economy have been shrinking over the past few months, raising fears of an economic crisis. Wednesday’s rate cut was primarily in a bid to balance the economy.

However, investors were lately more desperate to get a clearer picture of the future rate cut path. Federal Reserve Chairman Jerome Powell hinted at two more 25-basis-point rate cuts this year. This will take the benchmark policy rate to a range of 3.5-3.75% by December.

Also, the central bank raised its economic growth forecast in the Summary of Economic Projections (SEP) report, as cited in a Yahoo Finance article. The Fed raised its GDP forecast for the year. Lower borrowing costs bode well for the broader economy, as it is likely to boost several sectors.

5 Discretionary Stocks With Growth Potential

Boyd Gaming Corporation 

Boyd Gaming Corporation is a multi-jurisdictional gaming company. BYD owns and operates gaming entertainment properties in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio and Pennsylvania. 

Boyd Gaming Corporation’s expected earnings growth rate for the current year is 5.2%. The Zacks Consensus Estimate for current-year earnings improved 4.9% over the last 60 days. 

Norwegian Cruise Line Holdings Ltd.

Norwegian Cruise Line Holdings Ltd. is a leading cruise line operator. NCLH owns and operates three brands — Oceania Cruises, Regent Seven Seas Cruises and Norwegian Cruise Line.

Norwegian Cruise Line Holdings’ expected earnings growth rate for the current year is 13.7%. The Zacks Consensus Estimate for current-year earnings has improved 3% over the past 60 days.

Ralph Lauren Corporation

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 19.8%. The Zacks Consensus Estimate for the current-year earnings has improved 8.4% over the past 60 days.

Hasbro, Inc.

Hasbro, Inc. is engaged in the design, manufacture and marketing of games and toys. HAS offers traditional, high-tech and digital toys, games and licensed products under various well-known brands.

Hasbro’sexpected earnings growth rate for the current year is 21.5%. The Zacks Consensus Estimate for current-year earnings has improved 14.6% over the past 60 days. 

Grand Canyon Education

Grand Canyon Education, Inc. is a regionally accredited provider of online postsecondary education services focused on offering graduate and undergraduate degree programs in its core disciplines of education, business, and healthcare. In addition to its online programs, LOPE offers programs at its traditional campus in Phoenix, Arizona and onsite at the facilities of employers.

Grand Canyon Education’sexpected earnings growth rate for the current year is 12.8%. The Zacks Consensus Estimate for current-year earnings has improved 3.7% over the past 60 days

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This article originally published on Zacks Investment Research (zacks.com).

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