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, as represented by the Consumer Discretionary Select Sector SPDR ETF (XLY), have outperformed the broader market, providing investors with a total return of 20.8% compared to the Russell 1000's total return of 13.4% over the past 12 months. These performance figures are as of September 25, and all data below are as of September 28.

Here are the top 3 consumer discretionary stocks with the best value, the fastest earnings 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
Ardagh Group SA (ARD) 13.71 3.2 2.3
MGM Resorts International (MGM) 22.10 10.9 5.8
eBay Inc. (EBAY) 52.48 36.7 7.9

Source: YCharts

  • Ardagh Group SA: Ardagh Group is a Luxembourg-based manufacturer of containers and packaging products. Ardagh produces glass and metal packaging for beverages, vegetables, oils, condiments, pet food, and a variety of other consumer products. The company serves customers around the world.
  • MGM Resorts International: MGM is a holding company that, through its subsidiaries, owns and operates casino resorts. The resorts offer gaming, hotel, convention, dining, entertainment, retail, and other resort amenities. MGM's business has been negatively affected by the COVID-19 pandemic. However, the company intends to reopen on September 30 the last of its properties which were temporarily closed due to the pandemic.
  • eBay Inc.: eBay is a global e-commerce company that connects buyers and sellers from different countries throughout the world. The company offers marketplaces for online auctions and classified ads. eBay announced this summer that Norwegian online classifieds company Adevinta would acquire its classifieds business for roughly $9.2 billion. The transaction includes a payment to eBay of $2.5 billion in cash as well as roughly 540 million shares of Adevinta, making eBay the largest shareholder of Adevinta with about 44% of all outstanding shares.

Fastest Growing Consumer Discretionary Stocks

These are the consumer discretionary stocks with the highest year-over-year (YOY) earnings per share (EPS) growth the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.

Fastest Growing Consumer Discretionary Stocks

 

Price ($) Market Cap ($B) EPS Growth (%)
Berry Global Group Inc. (BERY) 47.43 6.3 1,320
Ford Motor Co. (F) 6.51 25.9 600.0
Etsy Inc. (ETSY) 118.28 15.0 435.7

Source: YCharts

  • Berry Global Group Inc.: Berry Global Group manufactures plastic packaging products. The company's products include lids, tubes, closures, trash bags, cups, plates, bottles, bowls, and more. Additionally, Berry Global produces adhesives, tapes, and other packaging materials. In Q3 FY 2020, ended June 27, net sales rose 50% YOY while operating EBITDA increased 67% to a record.
  • Ford Motor Co.: Ford Motor is a designer and manufacturer of cars and trucks. The company also provides vehicle servicing, financing, leasing, and insurance.
  • Etsy Inc.: Etsy is an e-commerce company offering handmade and vintage items as well as art, supplies, clothing, housewares, paper goods, and related products. The company caters to customers in the U.S. Etsy's business has been buoyed during the COVID-19 pandemic by a large-scale shift toward online shopping. These factors contributed to the company's strong Q2 2020 performance which included a 136.7% gain in revenue and 429.1% gain in net income compare to the same quarter a year earlier.

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 (%)
Tesla Inc. (TSLA) 407.34 380.3 790.6
Carvana Co. (CVNA) 203.26 34.7 188.2
Wayfair Inc. (W) 293.74 28.0 147.9
Russell 1000 N/A N/A 20.8
Consumer Discretionary Select Sector SPDR ETF (XLY) N/A N/A 13.4

Source: YCharts

  • Tesla Inc.: Tesla designs, builds, and sells electric vehicles and electric vehicle powertrain parts. Tesla sells vehicles directly to consumers and powertrain components to other automobile manufacturers.
  • Carvana Co.: Carvana operates an online platform to buy used cars. Additionally, the company offers test drives, car reviews, and vehicle financing services. On September 22, the company announced that it anticipated record performance in Q3 2020, including record-high quarterly performance in units sold, total revenue, EBITDA margin, and total gross profit per unit.
  • Wayfair Inc.: Wayfair is a household goods retailer providing furniture for bedroom, living room, kitchen and dining room, home office, patio, bathroom, and other spaces. In Q2 2020, the company reported GAAP net income of $273.9 million as total net revenue rose 83.7% YOY. Wayfair CEO, co-founder, and co-chairman Niraj Shah said the company saw record numbers of both new and repeat customers.