Consumer discretionary businesses are levered to the highs and lows of economic cycles. This sensitive demand profile can cause discretionary stocks to plummet when macro uncertainty enters the fray, and over the past six months, the industry has shed 7%. This performance was worse than the S&P 500’s 2.4% fall.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. Keeping that in mind, here is one consumer stock boasting a durable advantage and two we’re swiping left on.
Two Consumer Discretionary Stocks to Sell:
Oxford Industries (OXM)
Market Cap: $865.7 million
The parent company of Tommy Bahama, Oxford Industries (NYSE: OXM) is a lifestyle fashion conglomerate with brands that embody outdoor happiness.
Why Do We Pass on OXM?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and in-store experience
- Sales are projected to tank by 1.8% over the next 12 months as demand evaporates
- Underwhelming 10.7% return on capital reflects management’s difficulties in finding profitable growth opportunities
At $58.24 per share, Oxford Industries trades at 8.5x forward P/E. Check out our free in-depth research report to learn more about why OXM doesn’t pass our bar.
American Airlines (AAL)
Market Cap: $7.70 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 Should You Dump AAL?
- Sluggish trends in its revenue passenger miles suggest customers aren’t adopting its solutions as quickly as the company hoped
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
- High net-debt-to-EBITDA ratio of 6× could force the company to raise capital at unfavorable terms if market conditions deteriorate
American Airlines’s stock price of $11.67 implies a valuation ratio of 8x forward P/E. Read our free research report to see why you should think twice about including AAL in your portfolio.
One Consumer Discretionary Stock to Watch:
Deckers (DECK)
Market Cap: $19.14 billion
Established in 1973, Deckers (NYSE: DECK) is a footwear and apparel conglomerate with a portfolio of lifestyle and performance brands.
Why Are We Positive On DECK?
- Annual revenue growth of 18% over the last five years beat the sector average and underscores the popularity of its brand
- Free cash flow margin is forecasted to grow by 2.9 percentage points in the coming year, potentially giving the company more chips to play with
- Returns on capital are climbing as management makes more lucrative bets
Deckers is trading at $126.08 per share, or 19.9x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.
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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.
