The sentiment of U.S. consumers on the economy and its future outlook bolstered in June and July. On Jul 14, the University of Michigan reported that the preliminary index of the U.S. consumer sentiment for July came in at 72.6, well above the consensus estimate of 65.5. The final index for June was 64.4.

The index for July was the highest since September 2021. Moreover, the index climbed 12.7% month over month, marking its fastest pace of increase since December 2005. The sub-index for the current economic condition increased to 77.5 in July from 69 in June. The sub-index for consumer expectations increased to 69.4 in July from 61.5 in June.

Although, expectations for overall inflation for next 12 months rose to 3.4% in July from 3.3% in the prior month, it declined significantly from its peak of 5.4% in April 2022. Despite the Fed’s warning of two more expected interest rate hike of 25 basis points each, Americans are less worried now about a near-term recession.

On Jun 27, the Conference Board reported that the U.S. consumer confidence index increased to 109.7 in June, marking its highest level since January 2022 and surpassing the consensus estimate of 104. May’s data was also revised upward from 102.3 to 102.5.

The Present Situation Index rose to 155.3 in June from 148.9 in May. The Expectations Index surged to 79.3 in June from 71.5 in May. The Expectations Index has remained below 80 (the level indicates expectations of a recession within a year) since February 2022 excluding last December.

However, the data for June showed that the index is just marginally below the threshold of 80 buoyed by a solid month-over-month uplift. Importantly, the 12-month forward inflation expectations gauge fell to 6% in June, marking the lowest reading since December 2020. In June, considerably fewer consumers expected a recession for the next 12 months compared to May.

Our Picks

We have narrowed our search to five consumer-centric stocks with strong upside potential for the rest of 2023. All these stocks have witnessed robust earnings estimate revisions in the last 60 days. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy).

Marriott International Inc. MAR is benefiting from its focus on expansion initiatives, digital innovation, and loyalty program. MAR is also gaining from reopening international borders and leniency in travel restrictions, which have resulted in solid leisure demand along with business and cross-border travel improvements. MAR is consistently trying to expand its worldwide presence and capitalize on the demand for hotels in international markets.

Zacks Rank #2 Marriott International has an expected revenue and earnings growth rate of 13.1% and 25.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 30 days.

Kimberly-Clark Corp. KMB has been benefiting from its three growth pillars. These include a focus on improving KMB’s core business in the developed markets, speeding up growth of the Personal Care segment in developing and emerging markets and enhancing digital and e-commerce capacities. Apart from this, KMB’s pricing and saving initiatives have been aiding amid cost inflation.

Zacks Rank #1 Kimberly-Clark has an expected revenue and earnings growth rate of 2.4% and 10.3%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last seven days.

Celsius Holdings Inc. CELH specializes in commercializing healthier, nutritional functional foods, beverages, and dietary supplements. CELH markets Celsius, the calorie burner, through its wholly-owned operating subsidiary, Celsius Inc. CELH sells its products through grocery, drug, convenience, club and mass, and health and fitness channels.

Zacks Rank #2 Celsius Holdings has an expected revenue and earnings growth rate of 69.6% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.9% over the last 60 days.

Carnival Corp. & plc CCL has been benefitting from improved ticket pricing, solid onboard spending levels and capacity-generation initiatives. Solid booking trends for NAA and European segments were backed by strong demand, bundled package offerings and pre-cruise sales along with increased advertising activities.

CCL is the largest and historically, the most profitable cruise operator in the world. CCL’s cruise brands are well diversified across diverse geographies, including Asia and Europe, and strategically positioned at various price points within the larger North American cruise market.

Zacks Rank #2 Carnival has an expected revenue and earnings growth rate of 74.1% and 96.6%, respectively, for the current year (ending November 2023). The Zacks Consensus Estimate for current-year earnings has improved 15.8% over the last seven days.

DraftKings Inc. (DKNG) is a digital sports entertainment and gaming company catering to the competitive spirits of sports fans with products that include daily fantasy, regulated gaming, and digital media. DKNG is the only U.S.-based vertically integrated sports betting operator. DKNG is a multi-channel provider of sports betting and gaming technologies, powering sports and gaming entertainment for 50 operators across more than 15 U.S. and global markets.

Zacks Rank #2 DraftKings has an expected revenue and earnings growth rate of 44.3% and 41.8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.5% over the last seven days.

Carnival Corporation (CCL): Free Stock Analysis Report

Marriott International, Inc. (MAR): Free Stock Analysis Report

Kimberly-Clark Corporation (KMB): Free Stock Analysis Report

Celsius Holdings Inc. (CELH): Free Stock Analysis Report

DraftKings Inc. (DKNG): Free Stock Analysis Report

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