5 Discretionary Stocks to Grab as Inflation Softens in November

The Federal Reserve cut interest rates in December but signaled only one rate cut in 2026, given that inflation remains high. However, a soft inflation reading for November has raised hopes that the Federal Reserve could revise its monetary outlook for next year and go for more rate cuts.

Also, the Federal Reserve is confident that inflation will decline steadily in 2026 and economic growth will accelerate. Given this scenario, we recommend five consumer discretionary stocks, namely, Amer Sports, Inc. AS, Crocs, Inc. CROX, Kontoor Brands, Inc. KTB, Ralph Lauren Corporation RL and Roku, Inc. ROKU.

These stocks have seen positive earnings estimate revisions in the past 60 days, carry a Zacks Rank #2 (Buy), and are set for solid returns. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Inflation Eases in November

The consumer price index (CPI) report, which was released after a delay caused by the 43-day government shutdown, showed inflation rose 2.7% year over year in November, a lot slower than the consensus estimate of a 3.1% rise, according to data from the Bureau of Labor Statistics.

Core CPI, which strips out food and energy costs, climbed 2.6% year over year in November but came in below economists’ expectations of 3% increase. The Labor Department didn’t release the October CPI report but said that month-over-month CPI rose a combined 0.2% in October and November.

High inflation has been a major challenge for the Federal Reserve in cutting interest rates. However, the Federal Reserve still cut the interest rate by a quarter percentage point in its December policy meeting to support a slowing labor market. However, it signaled a single rate cut in 2026.

A softer-than-expected CPI report has now raised hopes that Federal Reserve officials may reassess their 2026 monetary outlook and go for more interest rate cuts. The Federal Reserve is also hopeful about inflation slowing down to 2.4% by the end of 2026 and economic growth accelerating to 2.3% next year.

5 Consumer Discretionary Stocks With Upside

Amer Sports, Inc. 

Amer Sports, Inc. is a group of iconic sports and outdoor brands, including Arc'teryx, Salomon, Wilson, Peak Performance and Atomic. AS’ brands are creators of exceptional apparel, footwear, equipment, protective gear and accessories.

Amer Sports’ expected earnings growth rate for next year is 21.5%. The Zacks Consensus Estimate for current-year earnings improved 10.7% over the last 60 days. AS currently carries a Zacks Rank #1.

Crocs, Inc.

Crocs, Inc. is one of the leading footwear brands with a focus on comfort and style. CROX offers a wide variety of footwear products, including sandals, wedges, flips and slides, that cater to people of all ages.

Crocs’ expected earnings growth rate for next year is 3.9%. The Zacks Consensus Estimate for current-year earnings has improved 5% over the past 60 days. CROX currently carries 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 next year is 5.3%. The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the past 60 days. KTB currently carries a Zacks Rank #2.

Ralph Lauren Corporation

Ralph Lauren Corporationis 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 next year is 9.1%. The Zacks Consensus Estimate for the current-year earnings has improved 0.7% over the past 60 days. RL has a Zacks Rank #2.

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.

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

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