AutoZone (NYSE:AZO)
AutoZone is the premier seller of aftermarket automotive parts, tools, and accessories to do-it-yourself customers in the United States. The company derives an increasing proportion of its sales from domestic commercial customers, although its presence in its home market is still dominated by its do-it-yourself operation, which accounts for nearly 75% of sales in country. AutoZone also has a growing presence in Mexico and Brazil. AutoZone had 6,767 stores in the U.S. (6,051), Mexico (664), and Brazil (52) as of the end of fiscal 2021.
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Lvmh Moet Hennessy Louis (OTCPK:LVMHF)
LVMH is a global producer and distributor of luxury goods. It operates six segments: fashion and leather goods, its largest and oldest; watches and jewelry; wines and spirits; perfumes and cosmetics; selective retailing (including Sephora and airport duty-free retailer DFS); and other (including publishing). Higher-profile brands include Louis Vuitton, Bulgari, Fendi, Givenchy, Tag Heuer, Hennessy, Moet & Chandon, Glenmorangie, Sephora, and Benefit. LVMH operates more than 5,000 stores around the globe and is headquartered in Paris.
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| Vol / Avg.2.872K / 6.259K | Mkt Cap327.010B |
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Lucid Gr (NASDAQ:LCID)
Lucid Group Inc is a technology and automotive company. It develops the next generation of electric vehicle (EV) technologies. It is a vertically integrated company that designs, engineers, and builds electric vehicles, EV powertrains, and battery systems in-house using our own equipment and factory. With a whopping 52 week price range from 9.60 – 64.86 and current price of 24.73, Lucid Group has shown a jump in share price that very few companies have experienced. The company will continue to see growth as the EV industry stays red hot in the eyes of drivers and investors.
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| Vol / Avg.157.110M / 64.086M | Mkt Cap9.095B |
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eBay (NASDAQ:EBAY)
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. eBay generates revenue from listing fees, advertising, revenue-sharing arrangements with service providers, and managed payments, with its platform connecting more than 154 million buyers and 19 million sellers across almost 190 global markets. eBay generates roughly 56% of its GMV in international markets (versus 44% in the U.S.), with a large presence in the U.K., Germany, and Australia.
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| Vol / Avg.12.500M / 4.651M | Mkt Cap31.130B |
| Day Range63.350 - 65.490 | 52 Wk Range40.160 - 67.800 |
Invest in the best consumer discretionary stocks with Interactive Brokers for fast and easy execution.
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.
Stocks in the consumer discretionary sector, which are holistically represented by the Invesco S&P 500® Equal Wt Cnsm Disc ETF (RCD), have broadly outperformed the market as RCD has provided investors with a return of 41.09% over the past 12 months, above the S&P 500’s total returns of 31.13%.
Here are the top consumer discretionary stocks with the highest growth, greatest value, strongest momentum, and most searches on Google.
Overview: Consumer Discretionary Stocks
When you invest in these stocks, you invest in the American consumer. These stocks tend to perform exceptionally well when Americans spend money. However, when people tighten their budgets, these stocks may not fare as well.
These stocks are cyclical stocks. Stock prices tend to follow economic cycles of expansion, peak, contraction and recovery. Consumer discretionary companies see strong demand and sales during periods of economic expansion. This is because when people have more income, they tend to spend more money on apparel, jewelry, cars, entertainment, dining out, vacations, toys and gym memberships, among other things.
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.
Best Online Brokers for Consumer Discretionary Stocks
It’s important to find the right broker that caters to your specific investing needs. Whether you value the most up-to-date research or low commission fees, these are some of the best picks.
- Best For:Active and Global TradersVIEW PROS & CONS:Securely through Interactive Brokers’ website
- Best For:Global Broker for Short SellingVIEW PROS & CONS:securely through TradeZero's website
Features to Look for in Consumer Discretionary Stocks
- Earnings per share: Be on the lookout for stocks with growing earnings per share (EPS). Positive and growing EPS is a signal of increasing profitability and higher profit margins. These factors can help a company claim more market share and hold its ground through an economic slowdown. EPS is calculated by subtracting preferred dividends from net income and then dividing the difference.
- Revenue growth: Revenue growth is the increase in sales from 1 period to another. This metric gives you an idea of how the company’s sales are growing and consumer demand. Robust revenue growth is a signal of customer loyalty, which can lead to more market share. Revenue growth is expressed as a percentage. It’s found on a company’s quarterly reports under “net revenue” or “net sales.”
- Dividend yield: The ability for a company to consistently return some of its profits to investors through dividends is a sign of strength and stability. This is especially true for consumer discretionaries that have been known to be sensitive to economic conditions. The dividend yield is the payout investors receive for owning 1 share of the company divided by the current stock price. It’s expressed as a percentage.
Managing the Volatility of Consumer Discretionary Stocks
Because these stocks follow the market, they tend to get a reputation for being volatile. While there is some truth to this generalization, it overlooks some key points about investing in these stocks.
If you choose a consumer discretionary stock with a strong customer base, sound financials and proven track record of revenue growth it will likely rebound and grow after a slowdown. The same way the economy bounces back from a lull — and so do the best consumer discretionary companies.
A good investment strategy is to buy these when the market contracts. This way you will position yourself better when the market rebounds. It’s also a good idea to wait out the storm and only sell your position when the market is back on top.
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.
All in all,these stocks may come with their fair share of volatility but the long-run returns can be well worth the hassle.
Frequently Asked Questions
What's the best way to invest in consumer discretionary stocks?
Consumer discretionary stocks can be volitile, but if you choose a stock with a strong followinig, it will decrease your risk.
Are consumer discretionary stocks a long-term investment?
Yes, consumer discretionary stocks are best for long-term investments.
Which consumer discretionary stocks are the best?
Benzinga offers a list of the best consumer discretionary stocks on the list above.
Methodology
To create a specific set of companies and their respective stocks that fall under certain criteria, we utilized a screener to examine the top stocks under each criterion. For value companies, we analyzed the companies with the lowest forward P/E, current P/E, and P/E/G multiples; for growth companies, we analyzed high earnings and revenue growth - weighing them equally; for momentum, we looked at price growth in the past 52 weeks; for trending tech, we examined the stocks with the highest percent of search increment on Benzinga.