The performance of consumer discretionary businesses is closely linked to economic cycles. This sensitive demand profile can cause the industry to underperform when macro uncertainty enters the fray, and over the past six months, its 13.5% return has fallen short of the S&P 500’s 16.9% gain.
Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. On that note, here is one consumer stock boasting a durable advantage and two we’re swiping left on.
Two Consumer Discretionary Stocks to Sell:
News Corp (NWSA)
Market Cap: $15.7 billion
Established in 2013 after a restructuring, News Corp (NASDAQ: NWSA) is a multinational conglomerate known for its news publishing, broadcasting, digital media, and book publishing.
Why Do We Avoid NWSA?
- Sales stagnated over the last five years and signal the need for new growth strategies
- Projected sales growth of 2.3% for the next 12 months suggests sluggish demand
- Low returns on capital reflect management’s struggle to allocate funds effectively, and its falling returns suggest its earlier profit pools are drying up
At $27.11 per share, News Corp trades at 26x forward P/E. If you’re considering NWSA for your portfolio, see our FREE research report to learn more.
United Airlines (UAL)
Market Cap: $31.12 billion
Founded in 1926, United Airlines Holdings (NASDAQ: UAL) operates a global airline network, providing passenger and cargo air transportation services across domestic and international routes.
Why Do We Think Twice About UAL?
- Performance surrounding its revenue passenger miles has lagged its peers
- Low free cash flow margin of 3.5% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- ROIC of 9.4% reflects management’s challenges in identifying attractive investment opportunities
United Airlines is trading at $96.31 per share, or 7.7x forward P/E. To fully understand why you should be careful with UAL, check out our full research report (it’s free for active Edge members).
One Consumer Discretionary Stock to Watch:
Rush Street Interactive (RSI)
Market Cap: $1.70 billion
Specializing in online casino gaming and sports betting, Rush Street Interactive (NYSE: RSI) is an operator of digital gaming platforms.
Why Is RSI on Our Radar?
- Increase in monthly active users shows customers are eagerly embracing its offerings
- Projected revenue growth of 16.5% for the next 12 months suggests its momentum from the last two years will persist
- Earnings growth has massively outpaced its peers over the last four years as its EPS has compounded at 44.9% annually
Rush Street Interactive’s stock price of $17.41 implies a valuation ratio of 36.8x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
High-Quality Stocks for All Market Conditions
Fresh US-China trade tensions just tanked stocks—but strong bank earnings are fueling a sharp rebound. Don’t miss the bounce.
Don’t let fear keep you from great opportunities and take a look at Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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