Top 5 Consumer Discretionary Stocks: September 2023

best consumer discretionary stocks

Nike  was founded in 1964 as Blue Ribbon Sports by University of Oregon track-and-field coach Bill Bowerman and Phil Knight, his former student. Blue Ribbon Sports launched Nike as a shoe brand in 1972, and in 1978 the entire company rebranded as Nike as it had become a more recognizable brand. By 2021, Nike had grown to more than 1,000 retail outlets worldwide, with sales in 170 countries. While CITs and mutual funds share many similarities, there are some key differences… Recent stocks from this report have soared up to +178.7% in 3 months – this month’s picks could be even better. 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.

The mega cruise ship, Symphony of the Seas, is over 228,000 tons and has a span of more than 1,100 feet. Royal Caribbean’s biggest direct competitor is Carnival Cruises, which has mostly projected an image of fun and affordability in contrast to Royal Caribbean’s image of affordable luxury. It’s important to find the right broker that caters to your specific investing needs.

#37 – Wynn Resorts

The entertainment industry has become an integral part of how we all live, love, and laugh. For most people, not a day goes by without consuming some form of non-essential media, such as books, magazines, music, TV shows, or movies. On a semi-regular basis, most people will attend a venue like a theme park or movie theatre. Their dedication to quality and consistency helps these entertainment stocks ride out waves of recession and bounce back when consumer spending power increases. Many of them share their earnings with consumers, making these stocks a great part of a dividend investing strategy.

With extra money available, consumers have a choice on how to allocate it. Prudent options include saving or investing for the future, but the more popular option is to spend. The company has successfully navigated the Covid-19 pandemic with online sales growing by 155% and 118% during Q and Q4, respectively. These are the consumer discretionary stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio.

  • In 2020 and 2021, the majority of the stimulus checks were saved, and higher-than-normal savings rates were also due to more generous unemployment insurance payouts and rising wage rates.
  • Unlike consumer staples companies, which make necessities, consumer discretionary stocks tend to do well when the economy is strong and poorly when times are tough.
  • With over 25 years on the Global Fortune 500, Disney is the undisputed leader in the entertainment industry and a highly lauded brand known for its commitment to customer loyalty and brand image.
  • The entertainment industry has become an integral part of how we all live, love, and laugh.
  • They own a sizeable share of Aeromexico and Virgin Atlantic in addition to operating their own name brand and wholly-owned subsidiaries.
  • A native of Toronto, Canada, his sole objective is to help people become better and more informed investors.

Trains and boats are no longer an effective way to travel long distances and there is nothing to replace commercial airliners in the foreseeable future. However, the industry can see some impact from fluctuating fuel prices and disastrous events that shake consumer confidence. These are the companies that have made a name for themselves in the consumer discretionary sector, showing long-term solid performance on the stock market. Through quality products, stellar brand building, and customer loyalty, they’ve become household names around the world for what they offer, whether it’s animated entertainment, travel and vacations, or vehicles. Finally, the growth rates of revenue and earnings per share are key metrics to consider with any company, and that’s true for consumer durables as well.

Best Consumer Discretionary ETF

The consumer discretionary sector can be a great place to find growth stocks. This is because companies in this sector often benefit from strong consumer spending. When consumers spend money, companies in the consumer discretionary sector often see their sales and profits increase. At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. Since 1988 it has more than doubled the S&P 500 with an average gain of +24.32% per year.

  • The margin expansion opportunity originates from the consolidation of an overly complex and inefficient distribution network.
  • Hermes is a French luxury brand headquartered in Paris that sells goods online and in more than 300 stores around the world.
  • A mid-cap consumer discretionary company refers to a medium-sized business, typically with a market capitalization between $2 billion and $10 billion, that sells products that consumers purchase with discretionary income.
  • As of the date this article was written, the author does not own any of the above stocks.

Chris Markoch is a freelance financial copywriter who has been covering the market for over five years. At this point, the case against the stock goes beyond brick-and-mortar versus streaming. And the various strikes by groups in Hollywood may dry up the pipeline even further. The pandemic and resulting recession have forced many people to cut back on their expenses. The company was able to transition to a takeout-only operation fairly easily during the pandemic. While not technically a penny stock, Ford Motor Co. is trading at a very affordable price right now.

During recessions, the consumer discretionary industry can take a hit, as consumers hold on to old vehicles instead of buying new ones and have less cash to spend on non-essentials like travel. Yes, consumer discretionary stocks can be risky (like all investments) as the sector is heavily influenced by consumer trends and economic conditions. A mid-cap consumer discretionary company refers to a medium-sized business, typically with a market capitalization between $2 billion and $10 billion, that sells products that consumers purchase with discretionary income. The products within this sector are often regarded as nonessential, and the success of these businesses greatly depends on the state of the economy. The growth of discount retailers such as Dollar Tree, Inc. (DLTR) over the past decade has been nothing short of astonishing. The share price has risen by more than 1,500% since 2005, and the company has grown to a current market cap of approximately $39 billion as of April 18, 2022.

Consumer Discretionary Stocks FAQs

With the economy continuing to reopen, Disney looks poised to be among the winners in the recovery. The company reported a surge in profits in its parks and resorts segment, and it could even post record attendance due to pent-up demand. Consumer discretionary businesses cover several different industries, but all rely on consumers spending money that they don’t need to spend. An exchange-traded fund (ETF) is an investment fund that tracks an index, a commodity, or a basket of assets like an index fund but trades like a stock on an exchange. ETFs are one of the fastest-growing products in the investment industry.

best consumer discretionary stocks

I side with fellow InvestorPlace writer Ian Bezek in being doubtful about that. That leaves the fundamentals, and there’s very plataforma de trading little there to get excited about. But given the actions it took to dilute shareholders, it’s fair to ask at what cost?

Royal Caribbean Cruises are an upscale venue, but still accessible to the average consumer. Royal Caribbean Cruises Ltd. also owns Celebrity Cruises, another venue known for providing a quality experience for its passengers. Royal Caribbean operates a fleet of 26 ships, and in the recent race to build mega-sized cruise ships, they have frequently garnered the first-place prize.

Many of the top consumer discretionary stocks on the market are important parts of our culture. However, now could actually be a great time to buy consumer discretionary stocks. They have a long history as one of the most successful consumer discretionary stocks on the market. Instead, it’s an ETF that uses a benchmark index of top consumer discretionary stocks. This article will discuss the best consumer discretionary stocks to add to your portfolio right now. While the Federal Reserve has indicated its plan to keep raising interest rates in 2023 amid rising inflation and a strong labor market, some believe consumer spending will remain strong.

Receive latest news, trending tickers, top stocks increasing dividend this week and more. Our experts picked 7 Zacks Rank #1 Strong Buy stocks with the best chance to skyrocket within the next days. This ETF has heaviest allocation in the Consumer Discretionary sector–about 100% of the portfolio. Annual operating expenses for this ETF are 0.10%, making it one of the least expensive products in the space.

As market timing is extraordinarily difficult, look at long-term investments. 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. Consumer discretionary companies, in contrast, are more economically sensitive with products like luxury goods, sports apparel, home renovations, gym memberships, restaurants, vehicles, and boats. Looking at the weekly chart below, you’ll notice that the company’s stock price outperformed the XLY ETF for much of 2021, but it has been strongly correlated in 2022. From a trader’s perspective, the slight uptick in recent weeks could suggest that the price will return to the type of relative outperformance that it was experiencing previously.

Mistakes to Avoid When Investing in Consumer Discretionary Stocks

Companies in this sector tend to suffer during times of economic downturn, since consumers prioritize paying for necessities such as rent or food over discretionary purchases when their budgets are tight. One of the biggest home improvement retailers in the U.S., Lowe’s offers products for building, repair, remodeling and decorating, and also installation services through contractors throughout the country. Sales by January 2021 (a February through January fiscal year) had jumped 24.2% over the previous year. The stock price hit a high at the end of 2021 as many people who were stuck at home due to Covid restrictions put money into remodeling. The company has an earnings yield of 8.4% and a 2.2% dividend yield, relatively rare for consumer discretionary firms.

Consumer Discretionary Select Sector SPDR Fund (XLY)

Information is provided ‘as-is’ and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see Barchart’s disclaimer. A company’s financial stability can be measured by its debt-to-equity ratio, which is a good indicator of its ability to pay its debts. A company with a lower debt-to-equity ratio is typically more financially stable than a company with a higher ratio. Consumer durables and apparel is a broad industry group consisting of almost every long-lasting or nonconsumable product you can buy.

The airline industry is around a century old, which is a fairly long time in terms of business. Though there are around 5,000 airlines around the world, in reality most of them are wholly-owned subsidiaries of other companies—the four that really matter are American Airlines, Delta, Southwest, and United. In 2005, the company filed for bankruptcy due to rising costs of fuel. In 2008, Delta was already back to expanding, with its acquisition of Northwest Airlines. Delta is a member of the SkyTeam Alliance, a network of 19 different carriers serving 630 million passengers annually.

The Home Depot is the leading home improvement retailer globally offering products and services for DIY enthusiasts and professional contractors alike. The company has experienced remarkable growth during the COVID-19 pandemic as people spend more time in their homes fixing, maintaining or improving them. With a broad mix of seasonal products and offerings addressing homeowners’ needs all year round, The Home Depot is an essential consumer discretionary stock to consider. Stock prices tend to follow economic cycles of expansion, peak, contraction and recovery.

Consumer services

For 2023, FOXF’s initial guidance calls for $1.69 billion in revenue at the midpoint and $5.30 a share in adjusted earnings, slightly down from $5.49 in 2022. “We believe UGG and HOKA are two of the healthiest, well positioned brands in their respective markets, and with the strength of our operating model, Deckers is poised for continued success going forward,” Powers added. “Our brands delivered another stellar quarter, led by record results for both HOKA as well as our consolidated direct-to-consumer business,” said Dave Powers, president and CEO of Deckers Outdoor, in its Q press release.

Inflation is declining and major research institutions which were vehemently predicting recession are having second thoughts. 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. When things go south, consumers cut back on discretionary spending and only spend on essential items, making consumer discretionary stocks worst performers when common households are not doing good. But as recession clouds abate and consumer confidence begins to rebound, consumer discretionary stocks are back in action. The stocks “usually perform well when the economy is strong,” says Sam Boughedda, an equities trader and lead stock market news writer at “This is because consumers will have more money to spend on non-essential items.” As a result, they provide the potential for elevated returns.

Through the first nine months of fiscal 2023, HOKA’s revenues were $1.02 billion, 67% higher than a year earlier. Based on a 60% increase in Q4 2023, the brand will generate nearly $1.5 billion annually. Recreational product maker Brunswick (BC, $80.15) is a top stock pick of Cantillon Capital Management. At the end of December 2022, the New York-based hedge fund held 4.21 million shares, representing 5.81% of Brunswick’s outstanding shares. The company recently explained what’s made it successful in the five years since its creation as a holding company.

An education services company like Bright Horizons Family Solutions (BFAM) would be an example. The leisure products industry is made up of companies that sell nonconsumable goods that are used for fun. Camping equipment companies such as Camping World (CWH) would fit into this category. Real gross domestic product rose 1.1% in the first quarter of 2023, according to the Bureau of Economic Analysis’ advance estimate, after rising 2.6% in the fourth quarter of 2022. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research.

Investors should prioritize companies that are growing faster than their peers and operating in markets with strong secular growth rates, meaning long-term growth that persists across business cycles. You can use a stock screener to identify companies according to revenue and earnings-per-share metrics. Given consumers don’t have to buy consumer discretionary products or services, many consumer discretionary companies do well when the economy is strong and they don’t do as well when the economy is weak.

However, when the economy is struggling, consumers may cut back on their spending on discretionary items. The consumer discretionary sector is one of the eleven sectors of the Standard & Poor’s 500 stock market index. The sector comprises retailers, media companies, and manufacturers of consumer products.

Then over a few years, as first mailing DVDs grew and then streaming, it virtually disappeared. Purchased by Dish Networks, by 2019 there was only one Blockbuster store left. Mispriced stocks are hiding in plain sight and present great investment opportunities for the remainder of 2023.

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