Buy 4 Discretionary Stocks as Fed Cuts Rates for Third Time This Year

The Federal Reserve cut interest rates for the third time this year on Wednesday, sending stocks on a rally. The move brought a sigh of relief for investors, who were skeptical about another rate cut by the Fed, given that inflation remains high.

Also, the Federal Reserve is confident that inflation will slow further in 2026 and economic growth will accelerate, which bodes well for the broader market.

Given this scenario, we recommend four consumer discretionary stocks, namely, Brightstar Lottery PLC BRSL, Las Vegas Sands Corp. LVS, Roku, Inc. ROKU and Kontoor Brands, Inc. KTB, which have strong potential for the coming year.

Stocks Rally After Fed’s Rate Cut

U.S. stocks rallied for the second straight day on Thursday after the Federal Reserve cut interest rates by a quarter percentage point, bringing the federal funds rate to a range of 3.5-3.75%. The move was highly anticipated, as investors' fears of no further rate cut this year had eased over the past couple of weeks.

The rate cut comes despite high inflation that remains a major challenge for the Federal Reserve. However, a shrinking labor market has made the central bank come forward and support the economy. Earlier, the Federal Reserve had cut interest rates in October, citing similar reasons.

Understandably, the Federal Reserve has shifted its focus from inflation for the time being and is supporting the economy. The Fed also hinted at a single rate cut in 2026. However, Fed Chairman Jerome Powell ruled out any chance of a rate hike in the coming year, giving a big boost to investors’ confidence.

Also, the Federal Reserve is confident that inflation will likely slow down to 2.4% by the end of 2026 and economic growth will accelerate to 2.3%. The dovish outlook from the Federal Reserve, coupled with the latest rate cut, bodes well for the broader market.

4 Consumer Discretionary Stocks With Upside

Brightstar Lottery PLC 

Brightstar Lottery PLC is a provider of gaming, digital and financial technology solutions. BRSL, formerly known as International Game Technology PLC, is based in New York.

Brightstar Lottery PLC’s expected earnings growth rate for the current year is 17.9%. The Zacks Consensus Estimate for current-year earnings improved 29.5% over the last 60 days. BRSL currently carries a Zacks Rank #2.

Las Vegas Sands Corp.

Las Vegas Sands Corp. is a leading international developer of multi-use integrated resorts primarily operating in the United States and Asia.

Las Vegas Sands’ expected earnings growth rate for the current year is 30%. The Zacks Consensus Estimate for current-year earnings improved 10.5% over the last 60 days. LVS currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Roku, Inc. 

Roku, Inc. is the leading TV streaming platform provider in the United States, Canada and Mexico based on hours streamed.

Roku’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current-year earnings has improved 83.3% over the past 60 days. ROKU has a Zacks Rank #2.

Kontoor Brands, Inc.

Kontoor Brands, Inc. is an apparel company. KTB designs, manufactures and distributes products. KTB’sbrand consists of Wrangler, Lee and Rock & Republic. Kontoor Brands Inc. is based in Greensboro.

Kontoor Brands’ expected earnings growth rate for the current year is 12.5%. The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the past 60 days. KTB currently carries a Zacks Rank #2.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research