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), Nike Inc. (NKE), and TJX Companies Inc. (TJX). Consumer discretionary companies tend to be more sensitive to the overall business cycle, since 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 in the past 12 months. They posted a total return of 11.3%, compared to the S&P 500's total return of 8.7%. These market performance numbers and the statistics in the tables below are as of May 27.
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|
|MGM Resorts International (MGM)||15.90||7.8||2.9|
|Nordstrom Inc. (JWN)||15.66||2.4||4.9|
|Carnival Corp (CCL)||14.46||11.3||5.4|
- MGM Resorts International: MGM Resorts International is a major operator of casinos and hotels in both Las Vegas and the Chinese gambling city of Macau. Altogether, the company owns 29 properties, offering amenities such as table games, slot machines, conventions, restaurants, and golf courses. MGM in March announced the temporary closure of all of its Las Vegas gambling properties due to the COVID-19 pandemic. However, the company has since begun reopening some of its properties.
- Nordstrom Inc.: Nordstrom is a clothing retailer focusing on high-end brands. It operates over 380 stores across the United States and Canada, in addition to offering online sales. Plunging retail sales stemming from the the COVID-19 pandemic forced the company to permanently close a number of U.S. stores.
- Carnival Corp: Carnival operates the world’s largest fleet of cruise ships. In addition to 100 vessels, the company also owns travel-related properties such as hotels and vacation destinations throughout the world. One of Carnival's cruise ships, the Grand Princess, received widespread news coverage in March 2020 following reports passengers had contracted COVID-19 while on the vessel.
Fastest Growing Consumer Discretionary Stocks
These are the consumer discretionary stocks with the highest year-over-year (YOY) earnings per share (EPS) growth for 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 (%)|
MGM Resorts International (MGM)
eBay Inc. (EBAY)
|Aptiv PLC (APTV)||71.89||18.3||567.4|
- MGM Resorts International: See above for company description.
- eBay Inc.: eBay offers marketplaces for online auctions and classified ads globally. It serves 190 markets. The company beat earnings per share (EPS) expectations for the first quarter of 2020, reporting EPS of $0.77 compared to the consensus estimate of $0.72.
- Aptiv PLC: Based in Dublin, Ireland, Aptiv PLC is a designer and manufacturer of vehicle components focused on safety features and electrical systems. In March 2020, the company voted to suspend its dividend payments to prepare for potential business disruptions related to COVID-19.
Consumer Discretionary Stocks with the Most Momentum
These are the consumer discretionary stocks that had the highest total return over the last 12 months.
|Consumer Discretionary Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Chipotle Mexican Grill Inc. (CMG)||1,055.70||29.4||49.5|
|Domino’s Pizza Inc. (DPZ)||372.10||14.6||32.1|
|The Home Depot Inc. (HD)||241.88||259.8||31.5|
|S&P 500 (SPY)||N/A||N/A||8.7|
|Consumer Discretionary Select Sector SPDR ETF (XLY)||N/A||N/A||11.3|
- Chipotle Mexican Grill Inc.: Chipotle Mexican Grill operates more than 2,600 restaurants under the Chipotle Mexican Grill brand. Chipotle's online orders surged in Q1 amid the COVID-19 pandemic, but that failed to offset weakness in same-store sales.
- Domino’s Pizza Inc.: Domino’s Pizza is a pizza delivery company with a network of over 17,000 stores. In May 2020, the company announced that it had seen a significant rise in its U.S. sales due to a surge in takeout orders as millions of people sheltered at home amid the coronavirus pandemic.
- The Home Depot Inc.: Home Depot is the world's largest home improvement retailer and sells a broad range of home-related products at its more than 2,200 stores in North America, including tools, lumber, grills, garden supplies and appliances.
YCharts. "Financial Data," Accessed May 26th, 2020.
PRNewswire. "MGM Resorts International Statement On Temporary Closure Of Las Vegas Properties," Accessed May 27, 2020.
MGM Resorts International. "MGM Resorts Announces Opening Dates for Mississippi Properties," Accessed May 26th, 2020.
Nordstrom. "A Statement from Nordstrom: COVID-19 Store Update," Accessed May 26th, 2020.
Bloomberg Businessweek. "Carnival Executives Knew They Had a Virus Problem, But Kept the Party Going," Accessed May 26th, 2020.
Yahoo Finance. "eBay Inc. (EBAY)," Accessed May 26th, 2020.
Aptiv PLC. "Aptiv Provides COVID-19-Related Business Update," Accessed May 26th, 2020.
Wall Street Journal. "Chipotle’s Online Orders Surge, But Costs Hit Profit," Accessed May 27, 2020.
Domino's Pizza Inc. "Domino's Pizza Announces Business Update," Accessed May 26th, 2020.