Amidst the turbulence of economic forecasts, a shimmer of positivity glistens for consumer discretionary stocks. While the notion of a “soft landing” recession captivates the discourse among the investing punditry, a divided front is emerging.
On the one hand, market experts are teetering on the brink of skepticism. They eye economic indicators and events with wariness. Conversely, financial stalwarts like Bank of America’s (NYSE:BAC) Brian Moynihan, usher in a whisper of optimism, declaring the U.S. Federal Reserve has indeed accomplished a “soft landing”.
This assertion paves a path for an intriguing dialogue for those looking at the current market scenario as an opportune moment for investors to weave back into consumer discretionary stocks.
Royal Caribbean Cruises (RCL)
Royal Caribbean Cruises (NYSE:RCL) is one of the stalwarts in the international cruise sector, with its stock up over 83.5% year to date (YTD).
Effortlessly coasting through the stormy seas of the travel sphere, its results of late have been remarkable. Especially observable in a June quarter, it delivered revenues of $3.52 billion, outpacing analyst predictions by more than 3.2%. Moreover, its sales rose by a spectacular 61.3% year over year (YOY). Also, net income ballooned by roughly 188% to reach $458.8 million.
Furthermore, future projections are looking upward for the company. Drenched in positivity, Truist Securities notes, “forward-looking trends for 2024 and 2025 look exceptionally strong”. These words paint a canvas where industry-wide sales for the upcoming year are likely to rise by a remarkable 55% to 60% compared to 2019. And 2025 is forecasted to surge upwards by over 100%.
Synchronously, the travel and tourism niche, presently valued at $854.7 billion, is anticipated to rise to a whopping $1016 billion by 2027. The tailwinds of urbanization, higher leisure time, and technological advancements should further propel this cruise line to vibrant financial harbors.
Marriott International Inc (MAR)
Effortlessly navigating through the waves of the post-pandemic travel revival, Marriott International Inc (NASDAQ:MAR) has effectively emerged as a triumphant victor in the hospitality sphere.
MAR boasts a financial presence that gleams with robust earnings and a bullish sentiment among analysts. It sails through with expectations of double-digit annual growth in earnings across the current decade.
However, its journey offers more than just fiscal health, which includes a saga where strategic innovation intertwines with opportunistic expansion. Marriott is venturing into high-potential markets of China and India and exploring fresh paradigms including home rentals and wellness retreats. The company is sculpting a future that seeks to redefine hospitality.
The vision extends to adding a substantial 230,000 to 270,000 net rooms by 2025, complemented by a 5% to 5.5% CAGR. They anticipate global RevPAR growth of 3% to 6% from 2023 to 2025. The company also predict ascent of 16% to 18% in total gross fee revenue in 2023. Clearly, Marriott is expertly crafting a narrative of enduring, strategic prosperity.
Airbnb (ABNB)
Airbnb (NASDAQ:ABNB) stands as a distinguished entity, delivering incredible homestay and travel experiences. The company boasts a tangible global presence and an expansive canvas for future expansion.
Moreover, it recently posted a robust $2.5 billion in revenue for Q2, marking an 18% bump YOY. And an astute free cash flow (FCF) of $900 million implies an alluring annualized FCF potential touching $4 billion.
Globally, the platform continues to turn heads with its performances. It registers a 22% uptick in nights and experiences booked YOY in its Latin American segment and a 24% YOY growth in the Asia Pacific realm. Hence, its international segments are likely to be key protagonists in Airbnb’s unfolding growth narrative. Catalyzing its allure, the platform effectively combines convenience with accessibility, establishing itself as an industry linchpin in the homestay marketplace.
As we advance, the travel accommodation industry projects an ambitious trajectory from $632.8 billion in 2020 to a staggering $1,974.3 billion in 2031, cruising at a CAGR of 11.3%.
Li Auto (LI)
Li Auto (NASDAQ:LI) is a beacon of Chinese ingenuity in the development and selling of smart electric vehicles. Its ensemble features the six-seat Li L9, the premium Li L8, and the family-oriented five-seat Li L7. The lineup showcases a blend of sophistication, family-friendly functionality, and foresight in the burgeoning EV space.
Furthermore, it reported sales of $3.95 billion, with a 228.1% YOY, beating estimates by $150 million in Q2. And in the third quarter, total revenues are expected to fall between $4.46 billion to $4.59 billion, compared to the consensus of $3.88 billion.
A momentous occasion beckons in December with the company launching its inaugural battery electric vehicle, the Li Mega. This innovative leap is symbolic of Li Auto’s persistent drive toward the pinnacle of the EV market.
Moreover, the company may encounter a further boost should Chinese regulators ease restrictions on the stake foreign investors can maintain in publicly traded Chinese entities. Such a regulatory shift would accelerate Li Auto’s fundraising abilities, propelling its growth at an even swifter pace.
BYD Co. (BYDDF)
BYD Co. (OTCMKTS:BYDDF) has left an indelible mark on the global EV and battery manufacturing landscape. Garnering the nod from investment maestro Warren Buffet, BYD continues to post stupendous EV delivery figures.
The company anchors itself to become the second-largest battery manufacturer across the globe. A dazzling 204.7% profit surge and 73% YOY growth in the first half has catapulted it into a realm where it shines as a golden benchmark. This underscores an impressive 274,386 deliveries in August alone, reflecting a 57% YOY surge.
Broadening its horizons, BYD isn’t merely content with domestic triumph. It is embarking on a journey towards global acclaim with its foray into Thailand, Japan, France, and Australia. Also, the strategic acquisition of the mobility division of U.S. firm Jabil Inc. further amplifies BYD’s will to bolster its capacity in EV components.
Astonishingly, the China Association of Automobile Manufacturers notes that new energy vehicle sales in the first half of 2023 soared to 3.747 million units, marking a 44.1% YOY growth. Even in an economically challenging climate, Chinese consumers are fervently embracing EVs, which bodes incredibly well for BYD.
Coupang (CPNG)
Coupang (NYSE:CPNG) has rapidly evolved into a giant in the South Korean eCommerce space. Registering a robust 15% surge in revenue in the last quarter compared to the previous year, the firm witnessed its customer count grow by an extraordinary 10% YOY. This comes as no surprise. South Korea’s dense urban sprawl, notably in megacities including Seoul, is creating an environment ripe for eCommerce proliferation.
Demonstrating more than just revenue vitality, Coupang’s net income soared from a year ago, landing at an enviable $145 million. Moreover, the company is generating a staggering $1.96 billion in operating cash flow. Currently, its stock trades at a modest 1.3 times its forward sales estimates.
Yet, CPNG’s ambitions stretch beyond South Korea. The recent thrust into Taiwan offers a testament to the company’s expansionary vision. Notably, the rocket delivery service’s adoption rate in Taiwan outpaced its initial reception in its home country of South Korea. Hence, in the e-commerce tapestry of East Asia, Coupang is weaving an intricate and expansive design.
Lululemon (LULU)
In the fast-evolving world of yoga and athleisure, Lululemon (NASDAQ:LULU) gracefully occupies an enviable position.
In fact, it recently earned praise from investment bank Raymond James. Described as “one of the highest quality companies among global brands,” LULU continues to grow on the back of strong brand equity and a growing brand, perched to harness “significant opportunities for growth”. With 10% of Americans presently embracing the yoga lifestyle, the number has skyrocketed by a substantial 63.8% between 2010 and 2021.
Lululemon’s Q2 showing is nothing short of impressive. It boasts a 15% YOY ascension in men’s product sales and a 16% hike in women’s. Moreover, operational income leaped 23% YOY when sidelining particular items in the last quarter. Hence, the tapestry of robust financial performance and a deeply-rooted practice in American lifestyle craft a promising saga for LULU stock ahead.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
