U.S. consumers have regained some of their faith in the nation’s economy over the past month, or since the United States and China announced a trade truce and temporarily halted tariffs. Markets have since rebounded sharply and consumers are a lot more confident now.

Although trade anxiety persists, the situation has improved a lot from the lows seen in March and early April. This saw consumer confidence rebounding sharply in May. Given this positive sentiment, it would be ideal to invest in consumer discretionary stocks such as Netflix, Inc. NFLX, JAKKS Pacific, Inc. JAKK, Kontoor Brands, Inc. KTB, Fox Corporation FOX and Charter Communications, Inc. CHTR.

These stocks have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .

Consumer Confidence Soars in May

The Conference Board said on Tuesday that consumer confidence jumped to 98 in May, up 12.3 points from April and sharply above the consensus estimate of a rise to 87. The jump comes after five straight months of decline.

Also, the present situation index climbed 4.8 points month over month to 135.9. The expectations index surged to 72.8 in May, up 17.4 points sequentially. Also, 44% of investors now believe that stocks will be higher over the next 12 years, increasing 6.4% from April. The labor market outlook also improved, with 19.2% expecting more job availability in the next six months.

The Conference Board said that most of the positive sentiment came after trade tensions between the United States and China eased. Consumers and investors grew concerned about the future of the economy as Trump’s sweeping tariffs on the trading partners of the United States escalated trade war fears.

However, the Trump administration has since paused tariffs on most countries and has reached deals with some of the trading partners. Consumer sentiment got a further boost on Wednesday after a federal trade court ruled that Trump’s tariffs are “illegal” and blocked them. Wednesday’s ruling could further boost consumers’ confidence. Also, markets are pricing two 25 basis point rate cuts starting September this year as inflation has been showing signs of cooling.

5 Discretionary Stocks With Upside

Netflix, Inc.

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.