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In the current financial landscape, there are several promising signs of potential prosperity. The stock market is climbing to new heights, indicated by the S&P 500 reaching record levels and the Nasdaq index not far behind. Even speculative investments like Bitcoin (BTC-USD) have been rallying, reflecting the growing optimism among investors.
Moreover, critical economic indicators are portraying strength. The labor market remains robust, with unemployment hovering around historic lows. Meanwhile, GDP exhibited solid growth of 3.3% in Q4, and inflation has moderated after a previous spike. Anticipated rate cuts by the Federal Reserve are expected to further bolster the economy, as inflation cools off.
With breakthrough technologies such as AI continuously reshaping businesses, we might be on the brink of a sustained economic surge reminiscent of the “Roaring 20s” period a century ago. Naturally, there is always room for a reverse in fortune, but for now, the momentum appears tilted towards the upside.
If indeed we are on the cusp of an economic boom, certain stocks are likely to outperform. Particularly, stocks tied to robust consumer spending, technological innovation, and market speculation are poised to benefit greatly if the current trend continues. Here are three stocks worth considering if you share this outlook.
Tesla (TSLA)
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Amidst the current economic landscape, Tesla (NASDAQ:TSLA) stands out as a stock that could potentially witness significant growth should an economic boom materialize. The electric vehicle manufacturer possesses qualities that position it favorably to thrive in a bullish market environment.
Despite a 26% decline from its peak in December, now might be an opportune time for bullish investors to consider Tesla. The stock has been weighed down by concerns over lower deliveries, yet this pessimism seems excessive. Tesla has a track record of swiftly scaling up production to meet soaring demand for its vehicles. As economic momentum gains traction, consumers tend to loosen their purse strings – including for big-ticket items like cars.
Notably, purchasing TSLA stock below $200 appears promising based on historical performance. Furthermore, with electric vehicles accounting for merely 1% of cars on the road, Tesla still has ample room for growth in the coming years as electric vehicle adoption surges. As consumer and business confidence strengthens in future economic cycles, customers are more inclined to invest in premium products such as Teslas.
The recent decrease in EV demand due to rising interest rates might be short-lived. If inflation continues to ease back towards the 2% target, the Federal Reserve could start cutting rates as early as mid-year, giving the economy a jolt and reducing the cost of financing for potential Tesla buyers.
In summary, expectations for Tesla seem subdued despite the potential for a prosperous economic period. This undervaluation sets the stage for Tesla to surpass estimates and reward shareholders in an economic upswing.
Caesars Entertainment (CZR)
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Caesars Entertainment (NASDAQ:CZR) is another stock ideally positioned to capitalize in a modern-day Roaring Twenties environment. The hotel and casino operator owns iconic brands renowned for luxury, glamour, and entertainment – key attributes sought by consumers during prosperous economic times.
As consumers accumulated savings throughout the pandemic, the demand for leisure travel and experiential spending surged in the early post-pandemic period. However, the subsequent rise in inflation and interest rates prompted consumers to moderate their discretionary spending. This pullback caused CZR stock to plunge by over 63% from its 2021 peak.
With diminished expectations, CZR stock now appears appealing to investors anticipating an accelerating economic rebound. If inflation subsides and the Fed slashes rates to stimulate growth, cash-flush consumers are likely to unleash substantial pent-up demand for getaways to Caesars’ Las Vegas and regional casino resorts.
Analysts are already predicting quadruple growth in Ceasars’ earnings per share from 2023 to 2031, driven by mid-single-digit annual revenue expansion. However, if the macroeconomic environment becomes more supportive for consumers, Caesars could surpass expectations and deliver substantial returns to shareholders.
LVMH (LVMUY)
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Lastly, the French luxury goods conglomerate LVMH (OTCMKTS:LVMUY) also stands out as a stock set to ascend during an economic surge. Regardless of economic cycles – whether expansion or slowdown – the most prestigious brands tend to exhibit resilience. LVMH owns some of the most unmatched status symbols spanning fashion, wines and spirits, perfumes, watches, and jewelry.
Even during challenging times, affluent consumers continue to splurge on luxury items to maintain social status. Furthermore, periods of robust economic growth and bull markets disproportionately favor the wealthiest households. As their investable assets swell, high-net-worth individuals sustain demand for LVMH’s assortment of luxury products.
The company continues to excel, with a 15% increase in revenue and a 30% rise in net income over the past quarter. LVMH also boasts a robust 20% net profit margin, providing solid insulation in the event of economic downturns. Additionally, with a near 1.6% dividend yield, investors receive compensation as the luxury leader constantly innovates its iconic brand portfolio, generating sustained growth.
The author, Omor Ibne Ehsan, holds no positions in the securities mentioned in this article, either directly or indirectly, as of the publication date. The opinions expressed in this article reflect those of the writer and are subject to the InvestorPlace.com Publishing Guidelines.
Omor Ibne Ehsan is a writer at InvestorPlace. A self-taught investor, he focuses on growth and cyclical stocks with strong fundamentals, value, and long-term potential. He also maintains an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks. You can follow him on LinkedIn.
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