Laser Focus World is an industry bedrock—first published in 1965 and still going strong. We publish original articles about cutting-edge advances in lasers, optics, photonics, sensors, and quantum technologies, as well as test and measurement, and the shift currently underway to usher in the photonic integrated circuits, optical interconnects, and copackaged electronics and photonics to deliver the speed and efficiency essential for data centers of the future.

Our 80,000 qualified print subscribers—and 130,000 12-month engaged online audience—trust us to dive in and provide original journalism you won’t find elsewhere covering key emerging areas such as laser-driven inertial confinement fusion, lasers in space, integrated photonics, chipscale lasers, LiDAR, metasurfaces, high-energy laser weaponry, photonic crystals, and quantum computing/sensors/communications. We cover the innovations driving these markets.

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Editorial Advisory Board

  • Professor Andrea M. Armani, University of Southern California
  • Ruti Ben-Shlomi, Ph.D., LightSolver
  • James Butler, Ph.D., Hamamatsu
  • Natalie Fardian-Melamed, Ph.D., Columbia University
  • Justin Sigley, Ph.D., AmeriCOM
  • Professor Birgit Stiller, Max Planck Institute for the Science of Light, and Leibniz University of Hannover
  • Professor Stephen Sweeney, University of Glasgow
  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

3 Consumer Stocks We Approach with Caution

LZB Cover Image

The performance of consumer discretionary businesses is closely linked to economic cycles. Unfortunately, the industry’s recent performance suggests demand may be fading as discretionary stocks have pulled back by 6.1% over the past six months. This drawdown is a far cry from the S&P 500’s 5.3% ascent.

Investors should tread carefully as many companies in this space are also unpredictable because they lack recurring revenue business models. Taking that into account, here are three consumer stocks we’re steering clear of.

La-Z-Boy (LZB)

Market Cap: $1.49 billion

The prized possession of every mancave, La-Z-Boy (NYSE: LZB) is a furniture company specializing in recliners, sofas, and seats.

Why Do We Avoid LZB?

  1. Sales tumbled by 5.3% annually over the last two years, showing consumer trends are working against its favor
  2. Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 1.9%
  3. Waning returns on capital imply its previous profit engines are losing steam

At $36.19 per share, La-Z-Boy trades at 11x forward P/E. Check out our free in-depth research report to learn more about why LZB doesn’t pass our bar.

Smith & Wesson (SWBI)

Market Cap: $356.3 million

With a history dating back to 1852, Smith & Wesson (NASDAQ: SWBI) is a firearms manufacturer known for its handguns and rifles.

Why Do We Think SWBI Will Underperform?

  1. Products and services aren't resonating with the market as its revenue declined by 2.2% annually over the last five years
  2. Sales were less profitable over the last five years as its earnings per share fell by 17.7% annually, worse than its revenue declines
  3. Cash burn makes us question whether it can achieve sustainable long-term growth

Smith & Wesson is trading at $8.05 per share, or 17.9x forward P/E. Dive into our free research report to see why there are better opportunities than SWBI.

Warner Bros. Discovery (WBD)

Market Cap: $27.01 billion

Formed from the merger of WarnerMedia and Discovery, Warner Bros. Discovery (NASDAQ: WBD) is a multinational media and entertainment company, offering television networks, streaming services, and film and television production.

Why Do We Steer Clear of WBD?

  1. Annual sales declines of 4.2% for the past two years show its products and services struggled to connect with the market
  2. Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 30.9% annually
  3. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value

Warner Bros. Discovery’s stock price of $10.99 implies a valuation ratio of 3x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including WBD in your portfolio.

High-Quality Stocks for All Market Conditions

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