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 significantly outperformed the broader market, providing investors with a total return of 92.9% compared to the Russell 1000's total return of 79.4% over the past 12 months. These performance figures and all data throughout this article are as of March 22, 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) 12.59 5.2 4.4
eBay Inc. ( EBAY) 60.29 41.0 7.8
Lennar Corp. ( LEN.B) 78.26 24.4 8.0

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.
  • eBay Inc.: eBay is a global e-commerce company that connects buyers and sellers through marketplaces and classified ads in 190 markets globally. On March 2, eBay provided an update on the proposed combination of eBay Classifieds Group, the company's online classified ads service, with European online classified ads company Adevinta. The U.K. Competition and Markets Authority raised competition concerns regarding the proposed deal, and eBay and Adevinta responded by offering the divestment of each company's primary classifieds operations in the U.K. The company expects that the transaction will close in Q2 2021.
  • Lennar Corp.: Lennar Corp. builds single-family homes as well as offering real estate services such as mortgage financing, title insurance, and residential land. The company recently announced the launch of the Upward America Venture, which will acquire single family homes for rent in high growth markets in the U.S. The venture is backed by a $1.25 billion equity investment led by Centerbridge Partners and expects to acquire more than $4 billion in real estate assets from Lennar and possibly other companies.

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 (%)
Etsy Inc. ( ETSY) 219.77 27.7 332.0 128.7
Thor Industries Inc. ( THO) 141.48 7.8 357.7 36.2
Pool Corp. ( POOL) 336.22 13.5 229.5 44.1

Source: YCharts

  • 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.
  • Thor Industries Inc.: Thor Industries builds and sells recreational vehicles such as motorhomes, travel trailers, and camping trailers. The company sells mainly to customers in the U.S. and Canada. For Q2 FY 2021 ended January 31, Thor Industries saw net income climb by nearly five-fold YOY as net sales grew by 36.2% YOY. The company also reported strong increases in its order backlog for the period.
  • Pool Corp.: Pool Corp. is a distributor of swimming pools and related products. The company provides construction materials, replacement parts, fencing, and pool care products to customers globally. In early March, the company announced that Mark W. Joslin, senior vice president, CFO, and treasurer will retire in 2021. Melanie Housey Hart, current vice president, corporate controller and chief accounting officer, will replace him.

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 (%)
Wayfair Inc. ( W) 345.47 35.8 1,170
Carvana Co. ( CVNA) 273.92 47.2 833.3
Tesla Inc. ( TSLA) 670.00 643.1 683.6
Russell 1000 N/A N/A 79.4
Consumer Discretionary Select Sector SPDR ETF (XLY) N/A N/A 92.9

Source: YCharts

  • Wayfair Inc.: Wayfair sells household goods including furniture, home entertainment, bathroom, and related products.
  • Carvana Co.: Carvana Co. offers an online platform to buy used cars. It also provides test drives, car reviews, and financing services to customers.
  • Tesla Inc.: Tesla, the world's largest automaker by market value, mainly designs, builds, and sells electric vehicles and electric vehicle powertrain parts. Tesla sells its vehicles directly to consumers.

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