Consumer discretionary businesses are levered to the highs and lows of economic cycles. Over the past six months, it seems like demand trends are working against their favor as the industry has tumbled by 11.9%. This performance was seriously disappointing since the S&P 500 held steady.

Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. With that said, here is one consumer stock poised to generate sustainable market-beating returns and two we’re steering clear of.

Two Consumer DiscretionaryStocks to Sell:

Bally's (BALY)

Market Cap: $477.9 million

Headquartered in Providence, Rhode Island, Bally's Corporation (NYSE: BALY) is a diversified global casino-entertainment company that owns and manages casinos, resorts, and online gaming platforms.

Why Should You Sell BALY?

1. Annual revenue growth of 2.9% over the last two years was below our standards for the consumer discretionary sector
2. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
3. Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution

Bally's is trading at $9.75 per share, or 1.9x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than BALY.

American Outdoor Brands (AOUT)

Market Cap: $150.7 million

Spun off from Smith and Wesson in 2020, American Outdoor Brands (NASDAQ: AOUT) is an outdoor and recreational products company that offers outdoor and shooting sports products but does not sell firearms themselves.

Why Is AOUT Risky?

1. Muted 3% annual revenue growth over the last two years shows its demand lagged behind its consumer discretionary peers
2. Poor expense management has led to operating margin losses
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

American Outdoor Brands’s stock price of $11.83 implies a valuation ratio of 23.9x forward P/E. Read our free research report to see why you should think twice about including AOUT in your portfolio.

One Consumer Discretionary Stock to Watch:

Apple (AAPL)

Market Cap: $3.05 trillion

Creator of the iPhone and App Store, Apple (NASDAQ: AAPL) is a legendary developer of consumer electronics and software.

Why Does AAPL Stand Out?

1. Apple's revenue base is so large because nearly everyone in the U.S. has an iPhone, but this is a double-edged sword. Growth must now come from upgrades, a harder pitch that has resulted in sluggish top-line performance recently.
2. Still, Apple's devices have endured for decades, speaking to its brand, design ethos, and technological chops. Its success is rare in the world of consumer electronics, which is fraught because of commoditization, competition, and obsolescence risk.
3. The company may not have the best gross margin because of its hardware orientation, but it still manages to produce elite operating and free cash flow margins. This shows it doesn’t need over-the-top marketing campaigns to convince people to buy its products.

At $204.49 per share, Apple trades at 27.2x forward price-to-earnings. Is now the right time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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.