Companies in the consumer discretionary sector sell goods and services that are considered non-essential, such as appliances, automobiles, and entertainment. Prominent examples include Home Depot Inc. (HD), McDonald’s Corp. (MCD), and Nike Inc. (NKE). Consumer discretionary companies tend to be more sensitive to the overall business cycle because consumers are more likely to reduce or postpone their discretionary purchases when times are tough. In contrast, companies in the consumer staples sector focus on essential items such as food and beverages.
Consumer discretionary stocks, represented by the Consumer Discretionary Select Sector SPDR ETF (XLY), have underperformed the overall market, providing investors with a 34.6% total return compared to the Russell 1000’s total return. 38.6% during the last 12 months. These market performance figures and all data in the tables below are as of July 15, 2021.
Here are the top 3 consumer discretionary stocks with the best value, the fastest growth, and the most momentum.
These are the consumer discretionary stocks with the lowest price-to-earnings (P / E) in the last 12 months. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P / E ratio shows that you are paying less for every dollar of profit generated.
|Best Value Consumer Discretionary Stock|
|Price ($)||Market Cap ($ B)||Final 12-month P / E ratio|
|Qurate Retail Inc. (QRTEA)||12.10||4.9||3.6|
|Lennar Corp. (LEN.B)||78.63||24.6||7.3|
|H&R Block Inc. (HRB)||23.92||4.3||7.6|
- Qurate Retail Inc .: Qurate Retail is an e-commerce service provider. The company partners with television networks and e-commerce sites, social networks, mobile applications and similar platforms to provide video and digital commerce services around the world. Qurate operates brands such as QVC, HSN, Zulily and Frontgate, among others. On July 13, the company announced that David Rawlinson II will become president and CEO of the company effective October 1, succeeding Mike George, who is retiring. Previously, Rawlinson was CEO of NielsenIQ and President of Grainger Global Online.
- Lennar Corp .: Lennar builds single-family homes and offers real estate services such as mortgage financing, title insurance, property and casualty insurance, and closing services. In late June, the company announced that its board of directors had declared a quarterly dividend of $ 0.25 per common share. The dividend will be paid on July 19 to holders of record as of July 2, 2021.
- H&R Block Inc .: H&R Block offers a range of financial products and services. It offers tax preparation services, accounting and consulting services, as well as personal and financial productivity software for the consumer.
Here are the top consumer discretionary stocks ranked by a growth model that rates companies based on a 50/50 weighting of their most recent year-over-year (YOY) quarterly revenue percent growth and their most recent quarterly earnings per share ( EPS) growth. Both sales and profits are critical factors for the success of a business. Therefore, ranking companies by a single growth metric makes a ranking susceptible to accounting anomalies from that quarter (such as changes in tax law or restructuring costs) that can make one or the other figure unrepresentative. of the business in general. Companies with quarterly EPS or revenue growth greater than 2,500% were excluded as outliers.
|Fastest growing consumer discretionary stocks|
|Price ($)||Market Cap ($ B)||EPS growth (%)||Revenue growth (%)|
|Tesla Inc. (TSLA)||650.60||626.7||1,850||73.6|
|Etsy Inc. (ETSY)||182.30||23.2||900.0||141.5|
|Thor Industries Inc. (THO)||106.79||5.9||665.1||105.7|
- Tesla Inc .: Tesla is primarily involved in the design and manufacture of electric cars, SUVs, and trucks, as well as powertrain components for electric vehicles. The automaker also manufactures and installs solar power generation and storage products. Tesla announced in early July that it produced and delivered more than 200,000 vehicles in the second quarter of 2021.
- Etsy Inc .: Etsy is an e-commerce business that sells vintage and handmade items, as well as art, supplies, clothing, household items, paper items, and related products. In July, Etsy completed previously announced acquisitions of Elo7, a Brazil-based e-commerce marketplace for handmade items, and Depop, a community-driven marketplace for buying and selling unique fashions for Generation Z customers. In its press release, Etsy said it paid about $ 1.6 billion in cash, subject to certain adjustments, for Depop. The company reportedly paid $ 217 million for Elo7.
- Thor Industries Inc .: Thor Industries produces and sells a variety of recreational vehicles. Offers motorhomes, toy haulers, fifth wheel, light and travel trailers.
These are the consumer discretionary stocks that delivered the highest total returns over the past 12 months.
|Consumer discretionary stocks with greater momentum|
|Price ($)||Market Cap ($ B)||Total return at 12 months (%)|
|GameStop Corp. (GME)||166.82||11.6||3,880|
|L Brands Inc. (LB)||74.21||20.5||312.3|
|Capri Holdings Ltd. (CPRI)||50.20||7.6||195.8|
|Russell 1000||N / A||N / A||38.6|
|Select Sector Consumer Discretionary SPDR ETF (XLY)||N / A||N / A||34.6|
- GameStop Corp .: GameStop operates PC entertainment software and video game stores that sell new and used hardware, software and accessories. GameStop sells its products all over the world. GameStop has been the focus of attention in recent months from the investor communities on Reddit and elsewhere, causing wild swings in stock prices. So-called “meme stocks” have become increasingly popular with retail investors.
- L Brands Inc .: L Brands sells women’s clothing, lingerie, beauty, personal care, and home fragrance products under brand names such as Bath & Body Works, Victoria’s Secret, and PINK. L Brands announced on May 11 that it plans to split into two separately publicly traded companies: Bath & Body Works and Victoria’s Secret. The plan includes the tax-free spin-off of Victoria’s Secret for L Brands shareholders. On July 9, the company announced that the board of directors had formally approved the separation of Victoria’s Secret, as well as the corporate name change from L Brands Inc. to Bath & Body Works Inc., effective August 2.
- Capri Holdings Ltd .: Capri Holdings is a UK-based holding company that, through subsidiaries, designs, distributes and sells clothing and accessories. The company sells products including bags, shoes, watches, pants, sunglasses, and boots.
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