The consumer discretionary sector consists of companies offering goods and services that are considered non-essential, and are purchased if consumers have sufficient incomes. Automobiles, durable goods, and apparel are examples of consumer discretionary products. Companies offering goods and services related to entertainment and leisure are also in the sector. The consumer discretionary sector, dependent as it is on consumer incomes, is sensitive to the business cycle. By contrast, the consumer staples sector includes companies that offer essential items such as food, beverages, and household goods, and these businesses tend to be non-cyclical.

Well-known consumer discretionary companies include Nike Inc. (NKE), Ford Motor Co. (F), and Starbucks Corp. (SBUX). The sector, as measured by the Consumer Discretionary Select Sector SPDR ETF (XLY) has outperformed the S&P 500 by a narrow margin over the past year. XLY posted a 12-month trailing total return of 18.2% versus the 18.1% for the S&P, based on numbers as of November 20.

Consumer Discretionary Stocks with the Best Value

Here are the consumer discretionary stocks in the S&P 500 with the lowest 12-month trailing price-to-earnings (P/E) ratios in the sector. 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.

Consumer Discretionary Stocks with the Best Value
  Price ($) Market Cap ($B) 12-Month Trailing P/E
Macy's Inc. ( M) 15.04 4.7 4.6
General Motors Co. ( GM) 36.38 52.0 5.9
Gap Inc. ( GPS) 16.78 6.3 6.8
Source: YCharts
  • Macy's Inc.: Macy's is a retailer that operates department stores offering a wide range of merchandise, including apparel, accessories, cosmetics, home furnishings, and other consumer goods. Macy's has cut its 2019 profit forecast after reporting a larger than expected drop in same-store sales during Q3 2019.
  • General Motors Co.: General Motors is a leading manufacturer of automobiles and trucks. GM has been hurt by the longest strike by auto workers in 50 years, which lasted 40 days and reportedly cost the company about $2 billion in lost production.
  • Gap Inc.: Gap is a clothing and accessories retailer whose brands include Gap, Old Navy, Banana Republic, and Athleta. Gap plans to spin off Old Navy, but continued earnings disappointments may be putting this deal on hold.

Consumer Discretionary Stocks with the Fastest Earnings Growth

Here are the consumer discretionary stocks in the S&P 500 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.

Consumer Discretionary Stocks with the Fastest Earnings Growth
  Price ($) Market Cap ($B) EPS Growth (%)
Chipotle Mexican Grill Inc. (CMG) 766.78 21.3 141.9
Ball Corp. (BLL) 67.25 22.0 134.6
MGM Resorts International ( MGM) 31.81 16.4 43.3
Source: YCharts
  • Chipotle Mexican Grill Inc.: Chipotle owns and operates fast-casual, fresh Mexican food restaurants. The menu includes items such as burritos, tacos, burrito bowls, and salads. Chipotle crushed third-quarter earnings estimates after reporting adjusted EPS of $3.82, 19% above analyst estimates.
  • Ball Corp.: Ball operates globally to provide metal packaging for beverages, foods, and household products. The company also operates an aerospace division, which supplies diversified technical services and products to commercial and governmental customers for a wide range of information warfare, electronic warfare, avionics, intelligence, training, and space system needs. Q3 2019 EPS of 70 cents missed the consensus estimate of 72 cents by 2.8%.
  • MGM Resorts International: MGM is a worldwide operator of hotels, resorts, golf courses, and casinos. The company reported a Q3 2019 loss of 8 cents a share, while the consensus estimate called for a profit of 29 cents. MGM is in the process of executing an "asset light" strategy that involves selling lower-return assets. In Las Vegas, MGM has sold its Circus Circus casino and has entered into a sale and leaseback agreement for its Bellagio casino.

Consumer Discretionary Stocks with the Most Momentum

These are the consumer discretionary stocks in the S&P 500 that had the greatest total return over the past 12 months.

Consumer Discretionary Stocks with the Most Momentum
  Price ($) Market Cap ($B) 12-Month Trailing Total Return (%)
Chipotle Mexican Grill Inc. (GMG) 766.78 21.3 64.6
CarMax Inc. ( KMX) 110.15 16.5 61.0
PulteGroup Inc. (PHM) 39.38 10.7 58.5
S&P 500 (SPX) N/A N/A 18.1
Consumer Discretionary Select Sector SDPR ETF (XLY) N/A N/A 18.2
Source: YCharts
  • Chipotle Mexican Grill Inc: See above for company description.
  • CarMax Inc.: CarMax is the largest used-car dealer in the U.S., and also offers financing for buyers. EPS for fiscal Q2 2020, reported on Sept. 24, was $1.40, beating the consensus estimate by 5.5%.
  • PulteGroup Inc.: PulteGroup is a diversified homebuilder that constructs and sells homes, develops adult communities, and also purchases, develops, and sells residential land. The company offers mortgage financing, title insurance, and other services to home buyers. With customer demand fueled by low mortgage rates, homebuilding stocks have been outperforming the market in 2019.