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best consumer discretionary stocks

YETI products tend to be expensive, making the company something of a luxury brand, but it’s also developed a cult-like following for its high-performance products. That has helped it deliver solid growth and allowed it to expand its product line into items such as bags and other cargo gear, camping equipment, and even pet accessories. Benzinga offers a list of the forex tp on the list above. EBay operates one of the largest e-commerce marketplaces in the world, with $85 billion in 2020 gross merchandise volume, or GMV, rendering the firm the fifth-largest global e-commerce company.

At the same time, it raised its target price by $20 to $255, above where it’s currently trading. You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security.

The company remains committed to serving do-it-yourself (DIY) consumers, selling everything from tools and building supplies to gardening materials and home appliances. Recent years have also seen growth of new customer service options, including curbside pickup, buy at home/pickup in store and home delivery. Our editors are committed to bringing you unbiased ratings and information. We use data-driven methodologies to evaluate financial products and companies, so all are measured equally. You can read more about our editorial guidelines and the investing methodology for the ratings below.

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However, he suggests that the unusually high negative sentiment surrounding LULU has made it a value stock of sorts, something you wouldn’t have expected a year or two ago. Through March 15, the Consumer Discretionary Select Sector SPDR Fund (XLY) is up 8.9%, behind only technology and communication services as the top-performing sector year-to-date. McDonald’s began as a single hamburger stand in San Bernardino, Calif., that blossomed into an international franchise giant, practically inventing fast food along the way. By the early 21st century, McDonald’s had more than 34,000 stores in over 115 countries.

  • The ETF has a beta of 1.19 and standard deviation of 25.05% for the trailing three-year period, making it a medium risk choice in the space.
  • Many consumer discretionary companies offer products and services that cater to specific niche markets.
  • Wedbush analyst Tom Nikic (Outperform, the equivalent of Buy) commented on LULU in his Jan. 27 report to clients.
  • That doesn’t mean hold a stock when there is no longer a reason to but realize that any business and investment has its ups and down.
  • These positive developments are having a direct impact on the consumer discretionary sector, which suffered when dark clouds were hovering over the US economy and financial markets.

Some of the best consumer discretionary stocks to buy have brand names that are recognized around the world. These companies have built up a lot of equity in their brands and can command a higher price for their products.Look for companies with strong growth prospects. Still, there are reasons to be optimistic toward the best stocks to buy from the consumer discretionary sector. For one, “discretionary spending could remain strong among higher-income consumers who feel less squeezed by rising costs,” says Jordan Michaels, sector portfolio manager at Fidelity. You can buy shares of consumer discretionary stocks in a taxable brokerage account or an individual retirement account (IRA)—a few 401(k) plans may also allow you to purchase individual stocks. If you’re just getting started in investing, or want to change up your platform of choice, check out our listings of the best online brokers and the best investment apps.

With about 55 holdings, it effectively diversifies company-specific risk. The top 10 holdings account for about 71.72% of total assets under management. It has amassed assets over $17.47 billion, making it the largest ETF attempting to match the performance of the Consumer Discretionary – Broad segment of the equity market. XLY seeks to match the performance of the Consumer Discretionary Select Sector Index before fees and expenses. Consumer discretionary stocks are a great way to balance out your portfolio.

What factors should I consider before investing in consumer discretionary stocks?

Nike is a leader in athletic footwear, apparel, equipment, accessories, and related services in the global sports industry. The company successfully combines marketing strategies with noteworthy collaborations to appeal to consumers worldwide. As health and fitness trends bring in new demand for athletic wear and sports equipment, Nike continues to outperform its competitors with innovative designs and endorsements from influential athletes. Investing in Nike’s stock could bring compelling growth opportunities for a consumer discretionary portfolio.

best consumer discretionary stocks

Within the discount retail industry, larger firms such as Dollar Tree and Dollar General Corporation (DG) get most of the attention. However, one mid-cap company within the space, which is also a holding of the iShares Core S&P Mid-Cap ETF, is not as well known but could be worth a closer look. With a market capitalization of approximately $10 billion as of April 18, 2022, Five Below, Inc. (FIVE) offers products at a slightly higher price point relative to those of its direct competitors. Most products within its more than 1,200 stores sell at prices between $1 and $5, which gives the company some extra room for healthy profit margins relative to its competitors. Some products sell for more than $5, but these are often an exception in relation to its broader product mix.

During times when the economy is strong, consumers generally have more money to spend and many consumers spend more on premium items or services they don’t necessarily need. When the economy isn’t strong, many consumers will spend less on discretionary items. The consumer discretionary sector benefits when consumers have extra money in their wallets and are looking to spend it. Michael Kors accounted for $838 million of the gross revenue, whereas Versace generated $235 million in the fourth quarter.

It’s a large-cap company with a market cap of $56.2 billion, according to data from S&P Global Market Intelligence. Revenues have grown year in and out since 1992 and currently top $14 billion. Profits have also increased annually, with net income a roughly 13% to 16% margin. One downside though is the popularity of the stock, making shares pricey at well above $900.

Cons of consumer discretionary stocks

Though consumer durables are not consumer staples, the companies in this industry—especially the ones we’ve mentioned—are solid investments. Consumer durables stocks offer a wide range of choices for investors seeking portfolio exposure to both the manufacturing and consumer-facing sectors. The cyclical nature of consumer durables also makes the sector a good investment choice during an economic boom, although bear markets can also offer good buying opportunities.

  • Deloitte’s report, United States Economic Forecast, also stated that PCE is expected to grow by 7.6% in 2021.
  • Will has written professionally for investment and finance publications in both the U.S. and Canada since 2004.
  • That’s why, to find these stocks, I used a stock screener to find consumer stocks that had a consensus hold, sell or strong sell rating in the last 90 days.
  • NerdWallet, Inc. is an independent publisher and comparison service, not an investment advisor.
  • This makes it one of the top dividend stocks in the consumer discretionary sector.

Companies in the consumer discretionary sector provide products and services considered luxuries or non-necessities. Some consumer discretionary stocks include companies selling automobiles, apparel and electronics. However, consumer confidence and brand loyalty can stabilize the consumer discretionary sector. The consumer discretionary stocks sector is made up of companies that manufacture products and provide services that consumers purchase on a discretionary basis, such as luxury apparel and household furniture or appliances. This sector includes some of the world’s most well-known and largest companies, such as Home Depot, McDonald’s, and Nike.

One way to find consumer stocks to sell is to look at analyst sentiment. That’s why, to find these stocks, I used a stock screener to find consumer stocks that had a consensus hold, sell or strong sell rating in the last 90 days. In this article, we will take a look at the 15 best consumer discretionary stocks to buy according to hedge funds. To see more such companies, go directly to 5 Best Consumer Discretionary Stocks to Buy According to Hedge Funds.

Colgate-Palmolive Company (NYSE:CL)

Tesla’s vehicles are so popular that industry news sites track the length of waiting lists for each of its models. Last month, a Wall Street Journal report highlighted an important trend that adds another positive development in the latest cycle of positive news. The report said that for several months just a handful of companies were responsible for all the gains of the S&P 500 index. But that trend is changing and major sectors are now adding to the broader market’s growth. Several stocks from the consumer discretionary sector were also noted to have added to the total market gains.

As of April 2022, the company had more than 34,948 locations across the globe and expects to have 55,000 locations by 2030, indicating no shortage of growth opportunities. Nike has built a strong digital ecosystem around apps such as SNKRS and the Nike Training Club, which has buffered much of the impact. Even though revenue growth has been sluggish during the pandemic, the company has delivered solid profits and has outperformed rivals such as Adidas and Under Armour (UAA 1.12%)(UA 1.23%). Nike has established a dominant position in athletic footwear and apparel, with more than half a century of innovation in making sportswear appealing to a broad consumer audience. The strength of Nike’s business model stems from its product innovation, marketing strength, use of celebrity endorsements, and tying the success of high-profile athletes to the company’s products.

By introducing the European café concept to the U.S., Starbucks tapped into consumers’ urge to treat themselves to affordable luxuries, and its premium beverages now have a loyal following the world over. Enter your email address below to receive the latest headlines and analysts’ recommendations for your stocks with our free daily email newsletter. And the specialty retail industry includes clothing stores such as Nordstrom (JWN), electronics retailers like Best Buy (BBY) and home improvement stores such as Home Depot (HD). The retailing industry group might sound self-explanatory — but it’s a bit harder to define than you might think.

The company’s theme parks and animated movies are popular everywhere. Today, the company also owns ABC, ESPN, Pixar, Marvel, Star Wars, a majority stake in Hulu, and a vast array of assets that it acquired from Fox in a 2019 deal. The company also owns much of the real estate that its franchised restaurants occupy, allowing it to collect rent while franchisees do the hard work of running restaurants. © 2023 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions.

For the full year, MercadoLibre’s total revenue was up 49%, excluding currency, to $10.5 billion. However, the most important metric from 2022 was its operating profit. Looking at a geographic breakdown of sales, the U.S. accounts for 70% of revenue, followed by Europe (13%), Canada (7%) and Asia-Pacific (7%). Between 2020 and 2022, its Canadian revenues have jumped 86%,faster than the U.S. growth rate.

Best Value Consumer Discretionary Stocks

All in all,these stocks may come with their fair share of volatility but the long-run returns can be well worth the hassle. Investors can mitigate risks by diversifying their portfolio, conducting thorough research on companies and industry trends, and regularly monitoring their investments. Consumer discretionary stocks are stocks of companies that produce goods and services that are not considered essential or necessary for survival, but rather for enjoyment or luxury.

Marriott has built a solid reputation for itself as a quality purveyor of business and personal travel. Both Forbes and Time have ranked it as one of the best companies for employees. It’s hard to believe that this global conglomerate started as a pair of hotels in the 1950s, one of which was a Quality Inn outside the Washington D.C. The biggest players in this industry have been in business for decades—some even more than a century. Over those years, through quality products and solid management, they have solidified their footprint and positioned themselves to respond to rebound from bad times, while staying ahead of upstart competition.

Top Mid-Cap Consumer Discretionary Stocks

While the company is publicly traded, the Ford Family still retains 40% voting rights through the power of their special Class B shares of stock. Based on global revenue, Forbes is the 11th-most prosperous American-based company according to Fortune. YETI Holdings went public in 2018, and the stock has surprised some investors with its solid performance since then. The company is best known for its well-insulated coolers and tumblers that keep food and beverages cooler much longer than competing products.