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 10.9%. This performance was particularly discouraging since the S&P 500 held its ground.

A cautious approach is imperative when dabbling in these companies as many also lack recurring revenue characteristics and ride short-term fads. Keeping that in mind, here are three consumer stocks that may face trouble.

Columbia Sportswear (COLM)

Market Cap: $2.89 billion

Originally founded as a hat store in 1938, Columbia Sportswear (NASDAQ: COLM) is a manufacturer of outerwear, sportswear, and footwear designed for outdoor enthusiasts.

Why Do We Steer Clear of COLM?

1. Sales trends were unexciting over the last five years as its 6.3% annual growth was below the typical consumer discretionary company
2. Forecasted free cash flow margin suggests the company will fail to improve its cash conversion over the next year
3. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value

At $55.23 per share, Columbia Sportswear trades at 16.1x forward P/E. Dive into our free research report to see why there are better opportunities than COLM.

Leggett & Platt (LEG)

Market Cap: $1.30 billion

Founded in 1883, Leggett & Platt (NYSE: LEG) is a diversified manufacturer of products and components for various industries.

Why Do We Pass on LEG?

1. Annual revenue declines of 1.1% over the last five years indicate problems with its market positioning
2. Low free cash flow margin of 6% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

Leggett & Platt’s stock price of $9.55 implies a valuation ratio of 9x forward P/E. If you’re considering LEG for your portfolio, see our FREE research report to learn more.

Scholastic (SCHL)

Market Cap: $809.9 million

Creator of the legendary Scholastic Book Fair, Scholastic (NASDAQ: SCHL) is an international company specializing in children's publishing, education, and media services.

Why Is SCHL Risky?

1. Annual revenue growth of 6.4% over the last five years was below our standards for the consumer discretionary sector
2. Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

Scholastic is trading at $37.90 per share, or 15.5x forward P/E. Check out our free in-depth research report to learn more about why SCHL doesn’t pass our bar.

Stocks We Like More

WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.

But our AI platform says the party isn't over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.

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.