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3 Consumer Stocks We Find Risky

ⓘ This article is third-party content and does not represent the views of this site. We make no guarantees regarding its accuracy or completeness.

CZR Cover Image

Most consumer discretionary businesses succeed or fail based on the broader economy. Over the past six months, it seems like demand may be facing some headwinds as the industry’s 4.4% return has lagged the S&P 500 by 3.2 percentage points.

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

Caesars Entertainment (CZR)

Market Cap: $6.01 billion

Formerly Eldorado Resorts, Caesars Entertainment (NASDAQ: CZR) is a global gaming and hospitality company operating numerous casinos, hotels, and resort properties.

Why Is CZR Risky?

  1. Annual sales growth of 18.9% over the last five years lagged behind its consumer discretionary peers as its large revenue base made it difficult to generate incremental demand
  2. Improving returns on capital suggest management is identifying more profitable investments
  3. 7× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly

Caesars Entertainment is trading at $30.17 per share, or 98x forward P/E. If you’re considering CZR for your portfolio, see our FREE research report to learn more.

Rush Street Interactive (RSI)

Market Cap: $3.05 billion

Specializing in online casino gaming and sports betting, Rush Street Interactive (NYSE: RSI) is an operator of digital gaming platforms.

Why Do We Avoid RSI?

  1. 28.5% annual revenue growth over the last five years was slower than its consumer discretionary peers
  2. Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability
  3. Free cash flow margin is expected to increase by 1.2 percentage points next year, suggesting the company will have more capital to invest or return to shareholders

Rush Street Interactive’s stock price of $31.72 implies a valuation ratio of 47x forward P/E. To fully understand why you should be careful with RSI, check out our full research report (it’s free).

United Airlines (UAL)

Market Cap: $36.55 billion

Founded in 1926, United Airlines Holdings (NASDAQ: UAL) operates a global airline network, providing passenger and cargo air transportation services across domestic and international routes.

Why Should You Sell UAL?

  1. Performance surrounding its revenue passenger miles has lagged its peers
  2. Operating margin of 9.1% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
  3. Projected 5.5 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position

At $133 per share, United Airlines trades at 14.8x forward P/E. If you’re considering UAL for your portfolio, see our FREE research report to learn more.

Stocks We Like More

ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.

Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum 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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.

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