When you’re looking for the best consumer discretionary stocks to buy, you want to find companies with strong growth prospects. Look for companies that are expanding into new markets or launching new products. The consumer discretionary sector is often one of the most volatile sectors in the stock market. Consumers tend to spend more money on discretionary items when the economy is doing well.

  • Picking the best consumer discretionary stocks demands investors keep a keen eye on where and how consumers choose to spend their income.
  • It is one of only two consumer discretionary stocks held by the hedge fund, with human resources solutions provider Trinet (TNET) being the other.
  • Consumer discretionary stocks benefit from the power of their brands.
  • Software through 2023 that will reduce costs, improve network productivity, and enhance customer experience through better inventory availability.
  • Additionally, its stock trades at an attractive discount, providing an excellent opportunity to purchase its shares.

In October 2022, TSCO acquired 81 stores under the Orscheln Farm and Home banner for $391 million. As part of the deal, it sold the 85 remaining Orscheln stores to two other buyers for $69 million. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price.

These companies could have a brighter future than the market thinks.

These are the consumer discretionary stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you’re paying less for each dollar of profit generated. Be sure to fully diversify your portfolio with a series of consumer staple additions or ETFs to maintain stability during these periods and better avoid panic selling. The company has successfully navigated the Covid-19 pandemic with online sales growing by 155% and 118% during Q and Q4, respectively. 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.

Pawtucket, Rhode Island-based Hasbro is a branded play company providing children and families worldwide with entertainment offerings. From toys and games to motion pictures, television programming, and a licensing program, Hasbro reaches consumers through its well-known brands. Domino’s efficient business model and bright prospects are no secret to the market. Therefore DPZ stock has a lofty valuation, currently trading at $470 territory.

Risks of Consumer Discretionary Stocks

Companies in this sector hinge on a strong consumer ready to spend on non-essential or “discretionary” items. O’Reilly has a resilient business that thrives both during booming economic periods as well as during recessions. Since the start of the pandemic, O’Reilly has registered double-digit percentage sales growth in each of the past five quarters. While people tend to drive more when the economy is strong, consumers delay new car purchases and do their best to extend the life of their existing vehicles in tough times.

Consumer Discretionary Stocks Explained

Often, the best consumer discretionary stocks are not the cheapest to buy into. If you’re looking to invest in growth stocks for a smaller amount, take a look at Benzinga’s picks for stocks under $5, stocks under $10 and stocks under $20. Consumer discretionary stock prices tend to underperform when the economy contracts. That said, there are many well-managed companies in this sector with a proven track record of steady returns even in the worst economic climates. Here are the top consumer discretionary stocks with the highest growth, greatest value, strongest momentum, and most searches on Google. 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.

Cons of consumer discretionary stocks

It is one of only two consumer discretionary stocks held by the hedge fund, with human resources solutions provider Trinet (TNET) being the other. Off-price retailer TJX (TJX, $74.16) delivered solid fourth-quarter results in late February. On the top line, it brought in $14.52 billion, 4.8% higher than the year earlier. For the entire fiscal year, revenue was $49.94 billion, 2.9% better than in 2022. On the bottom line, it earned 89 cents a share in the fourth quarter, 14.1% higher than a year ago, while full-year earnings increased 9.1% to $3.11 a share. Some causes of volatility for consumer discretionary stocks can include changes in interest rates.

According to our latest data, CENT has moved about 15.5% on a year-to-date basis. Meanwhile, the Consumer Discretionary sector has returned an average of 5.3% on a year-to-date basis. This means that Central Garden is performing better than its sector Kraken Review in terms of year-to-date returns. Within the past quarter, the Zacks Consensus Estimate for CENT’s full-year earnings has moved 10.2% higher. This signals that analyst sentiment is improving and the stock’s earnings outlook is more positive.

It suspended production of passenger cars during World War II to focus on trucks and didn’t resume production of passenger vehicles until 1947. While CITs and mutual funds share many similarities, there are some key differences… Overall, the U.S. stock markets were slightly down for the rolling month. “Overall, the U.S. stock markets were mostly down for the rolling month. Strategies… However, with its current P/E ratio hovering around 100 and a $1.3 trillion market cap, some analysts are pondering whether the stock’s best days are behind it.

The report reveals that more than 50% of consumers plan to spend extra on electronics, beauty products, and apparel. In addition, Deloitte points out that personal consumption expenditure is forecast to go up by 7.6% in 2021. You can also buy a wide variety of consumer discretionary stocks at the same time through an ETF. This is often cheaper — both in dollars and in research time — than buying individual stocks. If you don’t have a brokerage account, you’ll need to open one in order to invest in consumer discretionary stocks. Read on to learn more about the top consumer discretionary stocks on the market right now.

When it comes to shopping, there are things that you need and things that are just nice to have. It includes goods and services that people spend money on when they have a little extra cash available, such as travel, going out to restaurants, or fashion and jewelry. With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate.

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Not only did revenue jump 27% year over year in the second quarter, but management is outperforming expectations where it counts. Earnings grew 55% year over year, while the company is even better at converting revenue into free cash flow, which has climbed over 300% in the last three years. Will has written professionally for investment and finance publications in both the U.S. and Canada since 2004. A native of Toronto, Canada, his sole objective is to help people become better and more informed investors. Fascinated by how companies make money, he’s a keen student of business history.

These companies should also be better able to weather a recession and endure the ongoing bear market since they have deeper pockets and brand equity to fall back on. This assertion paves a path for an intriguing dialogue for those looking at the current market scenario as an opportune moment for investors to weave back into consumer discretionary stocks. Through a combination of selective layoffs and the closing of underperforming stores, Children’s Place has steadily review building winning algorithmic trading systems slimmed down its store base in recent years. In its second quarter, it reported that 51% of its retail sales came from its e-commerce channel, which should help it bring in higher margins when it returns to growth. The company owns a portfolio of high-margin housewares and furniture brands that attract an affluent clientele. The housing market is suffering due to rising interest rates, but when it rebounds, Williams-Sonoma should pick up where it left off.

Downsides of Investing in Consumer Discretionary Stocks

The company also predict ascent of 16% to 18% in total gross fee revenue in 2023. Clearly, Marriott is expertly crafting a narrative of enduring, strategic prosperity. MAR boasts a financial the most suitable account type for me presence that gleams with robust earnings and a bullish sentiment among analysts. It sails through with expectations of double-digit annual growth in earnings across the current decade.