ZACKS·2026-02-18 09:05Core Viewpoint - The consumer discretionary sector has shown moderate growth over the past year, but is currently experiencing a negative year-to-date performance, prompting the identification of five stocks with potential for investment despite the sector's recent slump [2][4]. Consumer Discretionary Sector Overview - The consumer discretionary sector is characterized as growth-oriented, with share prices expected to increase over the long term. This sector is sensitive to market interest rate movements and typically exhibits an inverse relationship with them [3]. Interest Rate Impact - The Federal Reserve's recent easy monetary policies, including significant cuts to the benchmark lending rate, have created uncertainty regarding interest rate trajectories for the current year. Additionally, concerns about AI's impact on corporate profits have affected growth-oriented stocks [4]. Selected Stocks for Investment - Five consumer discretionary stocks have been identified for investment based on their favorable Zacks Rank: Ralph Lauren Corp., Roku Inc., Airbnb Inc., FOX Corp., and Carnival Corporation & plc. Each stock carries a Zacks Rank of 1 (Strong Buy) or 2 (Buy), with potential for double-digit price upside in the short term [5]. Ralph Lauren Corp. (RL) - Ralph Lauren has a Zacks Rank of 2 and is benefiting from its "Next Great Chapter: Drive Plan," which emphasizes brand elevation and operational agility. The company expects revenue growth in the high-single to low-double digits for fiscal 2026, with gross margin increasing by 40-80 basis points and operating margin expanding by 100-140 basis points [6][7]. - The expected revenue and earnings growth rates for Ralph Lauren are 11.7% and 30.5%, respectively, for the current year, with a short-term average price target indicating an 11.8% increase from the last closing price of $369.18 [8]. Roku Inc. (ROKU) - Roku holds a Zacks Rank of 1, showcasing strong platform revenue growth driven by innovative advertising and streaming services. The company has achieved significant household penetration and improved profitability through strong free cash flow generation [9][10]. - Roku's expected revenue and earnings growth rates are 15.4% and over 100%, respectively, for the current year, with a short-term average price target suggesting a 35.7% increase from the last closing price of $90.06 [13]. Airbnb Inc. (ABNB) - Airbnb has a Zacks Rank of 2 and is experiencing growth in Nights and Experiences Booked, positively impacting its Gross Booking Value. The company benefits from increasing guest demand and a recovery in cross-border travel [14][15]. - The expected revenue and earnings growth rates for Airbnb are 10.8% and 18.1%, respectively, for the current year, with a short-term average price target indicating a 20.4% increase from the last closing price of $121.35 [16]. FOX Corp. (FOX) - FOX has a Zacks Rank of 1 and produces a variety of content, including news and sports. The expected revenue and earnings growth rates for FOX are -0.9% and -2.3%, respectively, for the current year, but the Zacks Consensus Estimate for earnings has improved by 6.9% over the last 30 days [17]. - The short-term average price target for FOX suggests a 36.1% increase from the last closing price of $51.56 [18]. Carnival Corporation & plc (CCL) - Carnival has a Zacks Rank of 1 and is benefiting from strong demand, increased booking volumes, and a focus on marketing to attract new customers. The company emphasizes the role of digital marketing and AI in enhancing effectiveness [19][20]. - The expected revenue and earnings growth rates for Carnival are 4.6% and 12.9%, respectively, for the current year, with a short-term average price target indicating a 19.1% increase from the last closing price of $31.77 [21].