Consumer discretionary businesses are levered to the highs and lows of economic cycles. Lately, it seems like demand trends have worked in their favor as the industry has returned 18.1% over the past six months, outpacing S&P 500 by 4 percentage points.

Although these companies have produced results lately, investors must be mindful because many are fads and only a few will stand the test of time. Taking that into account, here are three consumer stocks we’re passing on.

Wyndham (WH)

Market Cap: $5.45 billion

Established in 1981, Wyndham (NYSE: WH) is a global hotel franchising company with over 9,000 hotels across nearly 95 countries on six continents.

Why Do We Pass on WH?

1. Weak revenue per room over the past two years indicates challenges in maintaining pricing power and occupancy rates
2. ROIC of 12% reflects management’s challenges in identifying attractive investment opportunities, and its shrinking returns suggest its past profit sources are losing steam
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

At $72.12 per share, Wyndham trades at 15.1x forward P/E. If you’re considering WH for your portfolio, see our FREE research report to learn more.

Acushnet (GOLF)

Market Cap: $4.90 billion

Producer of the acclaimed Titleist Pro V1 golf ball, Acushnet (NYSE: GOLF) is a design and manufacturing company specializing in performance-driven golf products.

Why Are We Out on GOLF?

1. Lackluster 10.1% annual revenue growth over the last five years indicates the company is losing ground to competitors
2. Low free cash flow margin of 7.2% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

Acushnet’s stock price of $83.62 implies a valuation ratio of 21.2x forward P/E. Dive into our free research report to see why there are better opportunities than GOLF.

American Airlines (AAL)

Market Cap: $9.78 billion

One of the ‘Big Four’ airlines in the US, American Airlines (NASDAQ: AAL) is a major global air carrier that serves both business and leisure travelers through its domestic and international flights.

Why Do We Steer Clear of AAL?

1. Sluggish trends in its revenue passenger miles suggest customers aren’t adopting its solutions as quickly as the company hoped
2. Free cash flow margin is expected to remain in place over the coming year
3. High net-debt-to-EBITDA ratio of 7× increases the risk of forced asset sales or dilutive financing if operational performance weakens

American Airlines is trading at $14.79 per share, or 8.5x forward P/E. If you’re considering AAL for your portfolio, see our FREE research report to learn more.

Stocks We Like More

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% 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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