5 Discretionary Stocks to Buy on Solid Rebound in Consumer Confidence

U.S. consumers have regained some of their faith in the nation’s economy over the past month, or since the United States and China announced a trade truce and temporarily halted tariffs. Markets have since rebounded sharply and consumers are a lot more confident now.

Although trade anxiety persists, the situation has improved a lot from the lows seen in March and early April. This saw consumer confidence rebounding sharply in May. Given this positive sentiment, it would be ideal to invest in consumer discretionary stocks such as Netflix, Inc. NFLX, JAKKS Pacific, Inc. JAKK, Kontoor Brands, Inc. KTB, Fox Corporation FOX and Charter Communications, Inc. CHTR.

These stocks have seen positive earnings estimate revisions in the last 60 days. 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.

Consumer Confidence Soars in May

The Conference Board said on Tuesday that consumer confidence jumped to 98 in May, up 12.3 points from April and sharply above the consensus estimate of a rise to 87. The jump comes after five straight months of decline.

Also, the present situation index climbed 4.8 points month over month to 135.9. The expectations index surged to 72.8 in May, up 17.4 points sequentially. Also, 44% of investors now believe that stocks will be higher over the next 12 years, increasing 6.4% from April. The labor market outlook also improved, with 19.2% expecting more job availability in the next six months.

The Conference Board said that most of the positive sentiment came after trade tensions between the United States and China eased. Consumers and investors grew concerned about the future of the economy as Trump’s sweeping tariffs on the trading partners of the United States escalated trade war fears.

However, the Trump administration has since paused tariffs on most countries and has reached deals with some of the trading partners. Consumer sentiment got a further boost on Wednesday after a federal trade court ruled that Trump’s tariffs are “illegal” and blocked them. Wednesday’s ruling could further boost consumers’ confidence. Also, markets are pricing two 25 basis point rate cuts starting September this year as inflation has been showing signs of cooling.

5 Discretionary Stocks With Upside

Netflix, Inc.

Netflix, Inc. is considered a pioneer in the streaming space. NFLX has been spending aggressively on building its portfolio of original shows. This is helping Netflix sustain its leading position despite the launch of new services like Disney+ and Apple TV+, as well as existing services like Amazon Prime Video.

Netflix’s expected earnings growth rate for the current year is 27.7%. The Zacks Consensus Estimate for current-year earnings has improved 3% over the past 60 days. NFLX currently carries a Zacks Rank #2.

JAKKS Pacific

JAKKS Pacific, Inc. is a multi-brand company that has been designing and marketing a broad range of toys and consumer products since 1995. JAKK not only develops its proprietary brands and marks but also uses licensing trademarks to access a far greater range of marks. Moreover, JAKKS Pacific licenses technology developed by unaffiliated inventors and product developers to enhance the design and functionality of its products. 

JAKKS Pacific’sexpected earnings growth rate for the current year is 12.7%. The Zacks Consensus Estimate for current-year earnings has improved 3.1% over the past 60 days. JAKK currently sports a Zacks Rank #1.

Kontoor Brands

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 9.6%. The Zacks Consensus Estimate for current-year earnings has improved 2.9% over the past 60 days. KTB currently carries a Zacks Rank #2.

Fox Corporation 

Fox Corporation produces and distributes news, sports and entertainment content. FOX’s brand includes FOX News, FOX Sports, the FOX Network, the FOX Television Stations and sports cable networks FS1, FS2, Fox Deportes and Big Ten Network.

Fox Corporation’s expected earnings growth rate for the current year is 32.36%. The Zacks Consensus Estimate for the current-year earnings has improved 2% over the past 60 days. FOX presently carries a Zacks Rank #1.

Charter Communications

Charter Communications, Inc. is the second-largest cable operator in the United States and a leading broadband communications company providing video, Internet and voice services. CHTR served approximately 30.1 million customers in 41 states through its Spectrum brand as of Dec. 31, 2024.

Charter Communications’ expected earnings growth rate for the current year is 13.2%. The Zacks Consensus Estimate for the current-year earnings has improved 4.5% over the past 60 days. CHTR presently has a Zacks Rank #2.

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

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