Companies in the consumer discretionary sector sell goods and services that are considered non-essential, such as appliances, cars, 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. By 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 broader market, providing investors with a total return of 34.6% compared to the Russell 1000's total return of 38.6% over the past 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.

Best Value Consumer Discretionary Stocks

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 you’re paying less for each dollar of profit generated.

Best Value Consumer Discretionary Stocks
  Price ($) Market Cap ($B) 12-Month Trailing 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

Source: YCharts

  • Qurate Retail Inc.: Qurate Retail is an e-commerce service provider. The company partners with television networks and e-commerce sites, social media, mobile applications, and similar platforms to provide video and digital commerce services worldwide. Qurate operates brands including 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 Oct. 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 had declared a quarterly dividend of $0.25 per common share. The dividend is payable on July 19 to holders of record as of July 2, 2021.
  • H&R Block Inc.: H&R Block provides a range of financial products and services. It offers tax preparation services, accounting and consulting services, as well as consumer financial and personal productivity software.

Fastest Growing Consumer Discretionary Stocks

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 year-over-year (YOY) percentage revenue growth and their 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 or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 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

Source: YCharts

  • Tesla Inc.: Tesla 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 early July that it produced and delivered more than 200,000 vehicles in Q2 2021.
  • Etsy Inc.: Etsy is an e-commerce company that sells handmade and vintage items as well as art, supplies, clothing, housewares, paper goods, and related products. In July, Etsy completed the previously-announced acquisitions of Elo7, a Brazil-based e-commerce marketplace for handmade items, and of Depop, a community-powered marketplace to buy and sell unique fashion catering to Gen 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 range of recreation vehicles. It offers motorhomes, toy haulers, fifth-wheel, light weight, and travel trailers.

Consumer Discretionary Stocks with the Most Momentum

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

Consumer Discretionary Stocks with the Most Momentum
  Price ($) Market Cap ($B) 12-Month Trailing Total Return (%)
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
Consumer Discretionary Select Sector SPDR ETF (XLY) N/A N/A 34.6

Source: YCharts

  • GameStop Corp.: GameStop operates video game and PC entertainment software stores that sell new and used hardware and software and accessories. GameStop sells its products worldwide. GameStop has been the focus of attention in recent months by investor communities on Reddit and other sites, which has led to wild swings in the stock price. So-called "meme stocks" have become increasingly popular among retail investors.
  • L Brands Inc.: L Brands sells women's apparel, lingerie, beauty, personal care, and home fragrance products under brands including Bath & Body Works, Victoria's Secret, and PINK. L Brands announced on May 11 that it plans to split itself into two separately traded public companies: Bath & Body Works and Victoria's Secret. The plan includes the tax-free spin-off of Victoria's Secret to 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 corporate name change of L Brands Inc. to Bath & Body Works Inc., effective August 2.
  • Capri Holdings Ltd.: Capri Holdings is a U.K.-based holding company which, through subsidiaries, designs, distributes, and sells apparel and accessories. The company sells products including handbags, shoes, watches, pants, sunglasses, and boots.

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