Top Consumer Discretionary Stocks for April 2022

Companies in the consumer discretionary sector sell nonessential goods and services, such as appliances, cars, and entertainment. Consumer discretionary companies tend to be more sensitive to the overall business cycle because consumers are more likely to reduce or postpone discretionary purchases when times are tough. Therefore, discretionary stocks outperform the overall market during economic expansions, but they underperform it during economic contractions. By contrast, companies in the consumer staples sector sell essential items such as food and beverages, which are less sensitive to business cycles. Prominent examples of consumer staples companies are The Home Depot Inc. (HD) and McDonald’s Corp. (MCD).

Consumer discretionary stocks, which are represented by an exchange-traded fund (ETF)—the Consumer Discretionary Select Sector SPDR ETF (XLY)—have underperformed the broader market, providing investors with a total return of 9.0% compared with the Russell 1000’s total return of 12.9% over the past 12 months. These market performance figures and all data in the tables below are as of March 21, 2022.

Here are the top three consumer discretionary stocks with the best value, the fastest growth, and the most momentum.

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. But they also could turn out to be a classic case of a value trap.

Best Value Consumer Discretionary Stocks
  Price ($) Market Capitalization (Market Cap) ($B) 12-Month Trailing P/E Ratio
eBay Inc. (EBAY) 55.32 32.5 2.7
Foot Locker, Inc. (FL) 31.01 3.0 3.6
Ford Motor Co. (F) 16.48 66.0 3.7

Source: YCharts

  • eBay Inc.: eBay is a global e-commerce company that connects millions of sellers and buyers in 190 global markets. eBay enabled more than $87 billion of gross merchandise volume in 2021. The company reported financial results for Q4 of its 2021 fiscal year (FY), the three-month period ended Dec. 31, 2021. Net income rose 9.5% compared to the year-ago quarter. Revenue grew 5.4% year over year (YOY). eBay highlighted the acquisition of Sneaker Con’s authentication business, which it will use to help increase the scale and flexibility of its operations.
  • Foot Locker Inc.: Foot Locker is an athletic footwear and apparel retailer. It sells its products in physical stores and direct-to-consumers via the internet and mobile sites as well as catalogs. 
  • Ford Motor Co.: Ford is a major manufacturer of sedans, SUVs, trucks, and other vehicles and is mounting a major initiative to catch up to rivals in electric vehicles (EVs) and mobility vehicles.

These are the top consumer discretionary stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.

Fastest Growing Consumer Discretionary Stocks
  Price ($) Market Cap ($B) EPS Growth (%) Revenue Growth (%)
Tesla Inc. (TSLA) 921.16 952.0 754.2 64.9
Choice Hotels International Inc. (CHH) 140.56 7.8 714.3 47.2
Penn National Gaming Inc. (PENN) 43.31 7.3 271.4 53.1

Source: YCharts

  • Tesla Inc.: Tesla, the world’s largest automaker by market value, is primarily engaged in the design and manufacture of electric cars, SUVs, and trucks, as well as electric vehicle powertrain components. The automaker also manufactures and installs solar energy generation and energy storage products. Tesla announced in late January financial results for Q4 FY 2021, which ended Dec. 31, 2021. Net income rose 759.6% compared to the year-ago quarter as revenue expanded 64.9%. The company said that it continued to face global supply chain challenges that limited its ability to run its factories at full capacity.
  • Choice Hotels International Inc.: Choice Hotels International is a franchiser of hotel properties. The company also provides vacation rental properties and other services to customers globally. 
  • Penn National Gaming Inc.: Penn National Gaming is an omni-channel provider of retail and online gaming, live racing, and sports betting entertainment. The company’s wholly owned interactive division operates retail sports betting, online social casino, bingo, and iCasino products.

These are the consumer discretionary stocks that had the highest total return over the past 12 months.

Consumer Discretionary Stocks With the Most Momentum
  Price ($) Market Cap ($B) 12-Month Trailing Total Return (%)
Sealed Air Corp. (SEE) 68.43 10.1 54.2
AutoZone Inc. (AZO) 1,938.69 38.5 46.3
Dick’s Sporting Goods Inc. (DKS) 108.93 9.4 43.0
Russell 1000 Index N/A N/A 12.9
Consumer Discretionary Select Sector SPDR ETF (XLY) N/A N/A 9.0

Source: YCharts

  • Sealed Air Corp.: Sealed Air provides packaging materials, equipment, systems, and related services. Its products include food packaging, automated equipment solutions, and general packaging products. The company announced in early February that it has acquired Foxpak Flexibles Ltd., an Ireland-based privately owned packaging solutions company. Financial terms of the deal were not disclosed.
  • AutoZone Inc.: AutoZone is a retailer and distributor of automotive replacement parts and accessories for cars, sport utility vehicles, vans, and light trucks. The company has locations in the U.S. as well as in Mexico and Brazil. AutoZone recently announced that its board of directors has approved the repurchase of an additional $2.0 billion of common stock as part of its ongoing share repurchase program.
  • Dick’s Sporting Goods Inc.: Dick’s Sporting Goods is a retailer specializing in the sale of a broad array of sporting goods. The company’s products include sports gear, equipment, apparel, and footwear. It serves customers across the U.S.

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