The performance of consumer discretionary businesses is closely linked to economic cycles. This volatility leads to big swings in stock prices that have worked in their favor recently - over the past six months, the industry has returned 23.1% and beat the S&P 500 by 7.2 percentage points.
Regardless of these results, investors should tread carefully as many companies in this space are unpredictable because they lack recurring revenue business models. Keeping that in mind, here are three consumer stocks best left ignored.
Levi's (LEVI)
Market Cap: $8.67 billion
Credited for inventing the first pair of blue jeans in 1873, Levi's (NYSE: LEVI) is an apparel company renowned for its iconic denim products and classic American style.
Why Should You Sell LEVI?
- Underwhelming constant currency revenue performance over the past two years suggests its product offering at current prices doesn’t resonate with customers
- Projected sales growth of 2.6% for the next 12 months suggests sluggish demand
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
At $21.70 per share, Levi's trades at 17.2x forward P/E. To fully understand why you should be careful with LEVI, check out our full research report (it’s free).
Wolverine Worldwide (WWW)
Market Cap: $2.48 billion
Founded in 1883, Wolverine Worldwide (NYSE: WWW) is a global footwear company with a diverse portfolio of brands including Merrell, Hush Puppies, and Saucony.
Why Do We Pass on WWW?
- Annual sales declines of 1.6% for the past five years show its products and services struggled to connect with the market
- Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 5.3% annually, worse than its revenue
- Negative returns on capital show management lost money while trying to expand the business, and its shrinking returns suggest its past profit sources are losing steam
Wolverine Worldwide is trading at $30.53 per share, or 24.2x forward P/E. Dive into our free research report to see why there are better opportunities than WWW.
MasterCraft (MCFT)
Market Cap: $362.2 million
Started by a waterskiing instructor, MasterCraft (NASDAQ: MCFT) specializes in designing, manufacturing, and selling sport boats.
Why Does MCFT Worry Us?
- Number of boats sold has disappointed over the past two years, indicating weak demand for its offerings
- Sales were less profitable over the last five years as its earnings per share fell by 7% annually, worse than its revenue declines
- Waning returns on capital imply its previous profit engines are losing steam
MasterCraft’s stock price of $22.21 implies a valuation ratio of 18.7x forward P/E. Read our free research report to see why you should think twice about including MCFT in your portfolio.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
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