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.

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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’re Skeptical Of

GIII Cover Image

Most consumer discretionary businesses succeed or fail based on the broader economy. Lately, it seems like demand trends have worked in their favor as the industry has returned 10.3% over the past six months, similar to the S&P 500.

Nevertheless, this stability can be deceiving as many companies in this space lack recurring revenue characteristics and ride short-term fads. Keeping that in mind, here are three consumer stocks we’re swiping left on.

G-III (GIII)

Market Cap: $1.17 billion

Founded as a small leather goods business, G-III (NASDAQ: GIII) is a fashion and apparel conglomerate with a diverse portfolio of brands.

Why Is GIII Risky?

  1. Sales stagnated over the last two years and signal the need for new growth strategies
  2. Sales are projected to tank by 1.1% over the next 12 months as demand evaporates further
  3. ROIC of 8.3% reflects management’s challenges in identifying attractive investment opportunities

G-III’s stock price of $27.07 implies a valuation ratio of 7.1x forward P/E. If you’re considering GIII for your portfolio, see our FREE research report to learn more.

Boyd Gaming (BYD)

Market Cap: $6.96 billion

Run by the Boyd family, Boyd Gaming (NYSE: BYD) is a diversified operator of gaming entertainment properties across the United States, offering casino games, hotel accommodations, and dining.

Why Should You Sell BYD?

  1. Annual revenue growth of 4.6% over the last two years was below our standards for the consumer discretionary sector
  2. Forecasted revenue decline of 11.6% for the upcoming 12 months implies demand will fall off a cliff
  3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

At $87.12 per share, Boyd Gaming trades at 13.1x forward P/E. Check out our free in-depth research report to learn more about why BYD doesn’t pass our bar.

Somnigroup (SGI)

Market Cap: $17.7 billion

Established through the merger of Tempur-Pedic and Sealy in 2012, Somnigroup (NYSE: SGI) is a bedding manufacturer known for its innovative memory foam mattresses and sleep products

Why Does SGI Fall Short?

  1. Sales trends were unexciting over the last two years as its 10.1% annual growth was below the typical consumer discretionary company
  2. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 9.6% for the last two years
  3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

Somnigroup is trading at $84.35 per share, or 30.3x forward P/E. Dive into our free research report to see why there are better opportunities than SGI.

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