JPMorgan recommends stocks to buy if economic recovery continues into the holidays

With the start of the holiday season just more than a month away, investors should keep an eye on some consumer names that may be positioned to benefit from continued economic recovery, according to JPMorgan. Last month, the Federal Reserve slashed interest rates by a half point – the first time the central bank cut rates since 2020. From there, the Federal Open Market Committee has indicated that rates could fall by another half point by the end of the year, as shown in its “dot plot.” Since the Sept. 18 meeting, the market has moved even higher, with all three major averages gaining between 1% and 3%. “Given better-than-expected dataflow post-FOMC, some are starting to question whether the Fed has cornered itself by indicating aggressive easing,” analyst Dubravko Lakos-Bujas wrote in a note to clients on Tuesday. “If so, the sluggish business cycle could more decisively shift back into recovery, as could animal spirits and inflation with upside to the pro-cyclical trade.” “For a confirmation of a broader recovery, the weakest areas of the economy (e.g., low-income consumers, private sector jobs, manufacturing, retail) will need to show improvement going into the holiday season,” he continued. With that in mind, JPMorgan screened for stocks in the S & P Composite 1500 Index – which includes the S & P 500 , the MidCap 400 and the SmallCap 600 – that were considered attractive based on the value of their intangible assets, brand name and pricing power. The bank noted that several of the companies in the screen have lagged the cyclical recovery, making the stocks likely to benefit from the market’s ongoing rotation. Here are some of the names that made the screen. JPMorgan rates Alaska Air overweight. Though shares have advanced more than 9%, the stock has underperformed the broader market this year. The company recently closed its $1.9 billion acquisition of Hawaiian Airlines following the U.S. Department of Transportation’s clearance of the deal. Wall Street is rather bullish on the name, as 10 of the 14 analysts covering the stock have a buy or strong buy rating. The remaining four analysts have taken a neutral stance. In the retail space, E.l.f Beauty also made the screen and has an overweight rating from the bank. Shares of that name have plummeted this year, falling nearly 28%. That said, the company has been performing well. In its latest earnings results, E.l.f beat the Street’s expectations , leading it to raise its full-year forecast. Chief Executive Tarang Amin attributed its growth to its budget-friendly approach . “The core of our proposition is taking the best of beauty and making it accessible for every eye, lip, face and skin need,” he told CNBC’s ” Mad Money ” last month. “And that’s really the key to our success is we can take inspiration from our community, the best products of prestige, and introduce them at a fraction of the cost.” ELF YTD mountain ELF, year-to-date Starbucks and Nike – two companies that have new CEOs at the helm, with former Chipotle CEO Brian Niccol at the coffee chain and company veteran Elliott Hill at the athletic retailer – landed on the screen as well. Though shares of Starbucks were marginally higher in 2024, as of Tuesday’s close, shares of Nike have plunged more than 25%. Both companies are hoping to improve business trends under their new leadership.