Companies in the consumer discretionary sector sell nonessential goods and services, 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 discretionary purchases when times are tough. Therefore, discretionary stocks outperform the overall market during economic expansions, but 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.

Consumer discretionary stocks, represented by the Consumer Discretionary Select Sector SPDR ETF (XLY), have gotten a big boost in the last 12 months due to the recovery of the US economy. Nonetheless, they have underperformed the broader market, providing investors with a total return of 27.9% compared to the Russell 1000's (IWB) total return of 34.3% over the past 12 months. These market performance figures and all data in the tables below are as of October 22, 2021.

Here are the top three 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. But they could also turn out to be a classic case of a "value trap."

Best Value Consumer Discretionary Stocks
  Price ($) Market Cap ($B) 12-Month Trailing P/E Ratio
Qurate Retail Inc. (QRTEA) 10.21 4.2 3.0
eBay Inc. (EBAY) 76.21 49.5 4.1
Foot Locker Inc. (FL) 48.88 5.1 5.0

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's brands include QVC, HSN, Zulily, and Frontgate, among others. Qurate Retail will report third quarter of 2021 earnings on Thursday, November 4th at 8:30 a.m. (E.D.T.).

  • eBay Inc.: eBay is a global e-commerce company that connects millions of sellers and buyers in 190 global markets. eBay has 1.5 billion live listings and 159 million active buyers worldwide, allowing the company to achieve economies of networking, the benefits associated with a large network of users. On October 14th, eBay announced that its ambitious greenhouse gas reduction plan was approved by the Science Based Targets initiative (SBTi) and aligned with the Paris Agreement. That's an important development for eBay's shares as it could attract institutional ESG funds for its shares.

  • Foot Locker Inc.: Foot Locker is an athletic footwear and apparel retailer. It sells its products in physical stores as well as direct-to-consumers via the Internet and mobile sites as well as catalogs. The company recently completed its acquisition of Eurostar Inc., an athletic footwear and apparel retailer, for $750 million.

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 (%)
Ross Stores Inc. (ROST) 110.71 39.3 2,220 79.0
Driven Brands Holdings Inc. (DRVN) 30.77 5.2 600 123.3
Chipotle Mexican Grill Inc. (CMG) 1843.83 51.8 2,180 38.7

Source: YCharts; Driven Brands Holdings Inc.

  • Ross Stores Inc.: Ross Stores operates two brands of off-price retail apparel and home accessories stores: Ross Dress for Less and dd's DISCOUNTS. The company offers name-brand and designer apparel, accessories, footwear, and home fashions at discount prices. Ross Stores announced in mid-July that Executive Vice President and Chief Financial Officer (CFO) Travis Marquette has resigned to accept a position with another company. On October 1, Adam Orvos was promoted to executive vice president and chief financial officer.
  • Chipotle Mexican Grill Inc.: Chipotle Mexican Grill owns and operates fast-casual Mexican restaurants throughout the U.S. The company sells burritos, bowls, salads, and related offerings. For Q3 2021, ended September 30, 2021, Chipotle reported that digital sales climbed by 8.6% YOY, accounting for 42.8% of all sales. The company reported substantial earnings and revenue growth as well, driven also by the strong recovery of its in-restaurant sales.
  • Driven Brands Holdings Inc.: Driven Brands Holdings is a holding company that, through its subsidiaries, offers automotive repair and maintenance services. Its brands include Meineke Car Care Centers, CARSTAR, Maaco, Take 5 Oil Change, and more. 

Consumer Discretionary Stocks with the Most Momentum

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 (%)
GameStop Corp. (GME) 181.71 13.9 1,190
Capri Holdings Ltd. (CPRI) 52.61 8.0 143.1
Nordstrom Inc. (JWN) 29.28 4.7 135.2
Russell 1000 (IWB) N/A N/A 34.3
Consumer Discretionary Select Sector SPDR ETF (XLY) N/A N/A 27.90

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. In recent months, the company's stock has been the most famous of the "meme stocks," stocks that are popular among retail investors through social media.
  • Capri Holdings Ltd.: Capri Holdings is a U.K.-based holding company that, through its subsidiaries, designs, distributes, and sells apparel and accessories. The company sells a range of products including handbags, shoes, watches, pants, sunglasses, and boots. Capri Holdings announced that it will hold its Q2 fiscal year (FY) 2022 earnings call on Nov. 3, 2021, at 8:30 a.m. EDT
  • Nordstrom Inc is an upscale retailer. It offers customers a broad selection of high-quality brand-name and private-label apparel, shoes, beauty, accessories, and home goods. On September 24, the company opened its first store home goods store in NYC.

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