4 Consumer Discretionary Stocks to Grab as Inflation Continues to Ease

Inflation eased in January, with prices of goods and services increasing at a slower-than-expected pace. This raised hopes that the Federal Reserve could finally breathe a sigh of relief and may consider easing its monetary policy in the near term.

Given this scenario, we recommend buying four consumer discretionary stocks, namely, Accel Entertainment, Inc. ACEL, Crocs, Inc. CROX, Alto Ingredients, Inc. ALTO and Dolby Laboratories, Inc. DLB.

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

Inflation Eases in January

The Bureau of Labor Statistics reported last week that the consumer price index (CPI) rose 0.2% sequentially in January, lower than the consensus estimate of a rise of 0.3%. Year over year, CPI rose 2.4% in January, down 0.3% from December. January’s reading brings back inflation to where it was after President Donald Trump slapped massive tariffs on U.S. imports.

Core CPI, which excludes the volatile food and energy costs, rose 0.3% month over month in January, which came in line with analysts’ expectations. Year over year, core CPI rose 2.5% in January, the lowest level since April 2021.

Price pressures have eased a lot from the time Trump imposed hefty tariffs on U.S. imports last April. The lower-than-expected rise in inflation has raised hopes of a rate cut in the coming months.

The Federal Reserve slashed interest rates by 75 basis points in total last year. However, it halted its rate cuts in January and hinted at just one 25-basis-point rate cut this year. However, market participants now believe that the central bank could go for more than one rate cut this year, which could start soon.

4 Consumer Discretionary Stocks With Upside

Accel Entertainment

Accel Entertainment, Inc. is a distributed gaming operator primarily in the United States. ACEL’s business consists of the installation, maintenance and operation of VGTs, redemption devices, which disburse winnings and contain ATM functionality, and other amusement devices in authorized non-casino locations such as restaurants, bars, taverns, convenience stores, liquor stores, truck stops and grocery stores.

Accel Entertainment’sexpected earnings growth rate for the current year is 15%. The Zacks Consensus Estimate for current-year earnings has improved 9.5% over the past 60 days. ACEL presently has a Zacks Rank #2.

Crocs

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 the current year is 7%. The Zacks Consensus Estimate for current-year earnings has improved 6.4% over the past 60 days. CROX currently carries a Zacks Rank #2.

Alto Ingredients

Alto Ingredients is a producer of specialty alcohols and essential ingredients. ALTO is focused on products spanning Health, Home & Beauty, Food & Beverage, Essential Ingredients and Renewable Fuels.

Alto Ingredients’expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 18.8% over the past 60 days. ALTO presently carries a Zacks Rank #1.

Dolby Laboratories, Inc.

Dolby Laboratories, Inc. develops audio and imaging technologies that revolutionize entertainment for user-generated content, TV shows, films, music and gaming. A majority of DLB’s revenues is derived from the licensing of audio technologies. Dolby Laboratories operates on various licensing models, including a two-tier model, an integrated licensing model, a patent licensing model, recoveries and collaboration arrangements.

Dolby Laboratories’expected earnings growth rate for the current year is 1.7%. The Zacks Consensus Estimate for current-year earnings has improved 2.6% over the past 60 days. DLB currently carries a Zacks Rank #2.

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Dolby Laboratories (DLB): Free Stock Analysis Report

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Alto Ingredients, Inc. (ALTO): Free Stock Analysis Report

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