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5 Discretionary Stocks to Buy as Inflation Slows in April

Ritujay Ghosh
·4-min read

Inflation eased in April, much to the relief of consumers, who have been grappling with price pressures. The Labor Department’s Bureau of Labor Statistics reported on May 15 that the consumer price index (CPI), a key measure of how much goods and services cost, rose 0.3% month over month in April, below the consensus estimate of a rise of 0.4%.

Year over year, CPI rose 3.4%, which came in line with the estimates. Core CPI, which strips out the volatile food and energy costs, rose 3.6% in April from year-ago levels and 0.3% sequentially, both in line with estimates.

Higher shelter and energy costs, which have particularly been worrying the Federal Reserve, were once again responsible for pushing up April CPI. Shelter costs jumped 5.5% from the year-ago levels and 0.4% sequentially, while energy costs rose 2.6% annually and 1.1% on a month-over-month basis.

The core year-over-year CPI reading is the lowest since April 2021. Month over month, core CPI increased at its slowest pace since December.

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Inflation increased unexpectedly in the first quarter of 2024 after declining sharply and steadily through 2023.

This raised fears that the Federal Reserve could further raise interest rates as inflation remained sharply higher than the central bank’s target of 2%.

However, Wall Street has been trying to fend off these fears and hold its ground, with all three major indexes ending higher for the past few weeks.

Also, the Federal Reserve said that it is unlikely that there will be further interest rate hikes. Instead, it said that it still plans at least three interest rate cuts by the end of this year. Lower interest rates bode well for growth stocks, such as tech and consumer discretionary.

Our Choices

We have narrowed our search to five consumer discretionary stocks such as PlayAGS, Inc. AGS, American Public Education, Inc. APEI, Crocs, Inc. CROX, Hasbro, Inc. HAS and Netflix, Inc. NFLX that have strong potential for 2024. These stocks have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. 

PlayAGS, Inc. is a designer and supplier of electronic gaming machines and other products and services for the gaming industry. AGS’ product line-up includes Class III EGMs for commercial and Native American casinos, video bingo machines for select international markets, table game products and interactive social casino products.

PlayAGS, Inc.’s expected earnings growth rate for the current year is 24,00%. The Zacks Consensus Estimate for current-year earnings has improved 212.5% over the past 60 days. AGS currently sports a Zacks Rank #1.

American Public Education, Inc. is an online and campus-based postsecondary education provider. APEI serves approximately 107,000 students through three subsidiary institutions: American Public University System, Rasmussen University segment and Hondros College of Nursing.

American Public Education’s expected earnings growth rate for the current year is 121.2%. The Zacks Consensus Estimate for current-year earnings has improved 12.7% over the past 60 days. APEI currently has a Zacks Rank #2.

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 5.2%. The Zacks Consensus Estimate for current-year earnings has improved 1.8% over the past 60 days. CROX presently has a Zacks Rank #2.

Hasbro, Inc. is engaged in the design, manufacture and marketing of games and toys. HAS offers traditional, high-tech and digital toys, games and licensed products under various well-known brands.

Hasbro’sexpected earnings growth rate for the current year is 45.4%. The Zacks Consensus Estimate for current-year earnings has improved 13% over the past 60 days. HAS presently sports a Zacks Rank #1.

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 52.1%. The Zacks Consensus Estimate for the current-year earnings has improved 7.4% over the past 60 days. Netflix currently sports a Zacks Rank #1.

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Netflix, Inc. (NFLX) : Free Stock Analysis Report

Hasbro, Inc. (HAS) : Free Stock Analysis Report

American Public Education, Inc. (APEI) : Free Stock Analysis Report

Crocs, Inc. (CROX) : Free Stock Analysis Report

PlayAGS, Inc. (AGS) : Free Stock Analysis Report

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Zacks Investment Research