ETFOptimize | High-performance ETF-based Investment Strategies

Quantitative strategies, Wall Street-caliber research, and insightful market analysis since 1998.


ETFOptimize | HOME
Close Window

3 Consumer Stocks Skating on Thin Ice

GPRO Cover Image

Most consumer discretionary businesses succeed or fail based on the broader economy. 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 4.4%. This performance was disappointing since the S&P 500 climbed 2.8%.

A cautious approach is imperative when dabbling in these companies as many also lack recurring revenue characteristics and ride short-term fads. On that note, here are three consumer stocks we’re swiping left on.

GoPro (GPRO)

Market Cap: $127.4 million

Known for sponsoring extreme athletes, GoPro (NASDAQ: GPRO) is a camera company known for its POV videos and editing software.

Why Should You Sell GPRO?

  1. Sales tumbled by 6.1% annually over the last five years, showing consumer trends are working against its favor
  2. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
  3. Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders

GoPro is trading at $0.82 per share, or 12.4x forward P/E. Read our free research report to see why you should think twice about including GPRO in your portfolio.

Service International (SCI)

Market Cap: $11.57 billion

Founded in 1962, Service International (NYSE: SCI) is a leading provider of death care products and services in North America.

Why Are We Cautious About SCI?

  1. Number of funeral services performed has disappointed over the past two years, indicating weak demand for its offerings
  2. Projected sales growth of 2.6% for the next 12 months suggests sluggish demand
  3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

At $81.26 per share, Service International trades at 20.7x forward P/E. If you’re considering SCI for your portfolio, see our FREE research report to learn more.

Universal Technical Institute (UTI)

Market Cap: $1.82 billion

Founded in 1965, Universal Technical Institute (NYSE: UTI) is a leading provider of technical training programs, specializing in automotive, diesel, collision repair, motorcycle, and marine technicians.

Why Does UTI Give Us Pause?

  1. Poor expense management has led to an operating margin of 7.8% that is below the industry average
  2. Free cash flow margin is forecasted to shrink by 1.6 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
  3. Low returns on capital reflect management’s struggle to allocate funds effectively

Universal Technical Institute’s stock price of $33.38 implies a valuation ratio of 15x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why UTI doesn’t pass our bar.

Stocks We Like More

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 9 Market-Beating Stocks. 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-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

Stock Quote API & Stock News API supplied by www.cloudquote.io
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms Of Service.


 

IntelligentValue Home
Close Window

DISCLAIMER

All content herein is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor should it be interpreted as a recommendation to buy, hold or sell (short or otherwise) any security.  All opinions, analyses, and information included herein are based on sources believed to be reliable, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. We undertake no obligation to update such opinions, analysis or information. You should independently verify all information contained on this website. Some information is based on analysis of past performance or hypothetical performance results, which have inherent limitations. We make no representation that any particular equity or strategy will or is likely to achieve profits or losses similar to those shown. Shareholders, employees, writers, contractors, and affiliates associated with ETFOptimize.com may have ownership positions in the securities that are mentioned. If you are not sure if ETFs, algorithmic investing, or a particular investment is right for you, you are urged to consult with a Registered Investment Advisor (RIA). Neither this website nor anyone associated with producing its content are Registered Investment Advisors, and no attempt is made herein to substitute for personalized, professional investment advice. Neither ETFOptimize.com, Global Alpha Investments, Inc., nor its employees, service providers, associates, or affiliates are responsible for any investment losses you may incur as a result of using the information provided herein. Remember that past investment returns may not be indicative of future returns.

Copyright © 1998-2017 ETFOptimize.com, a publication of Optimized Investments, Inc. All rights reserved.