3 Consumer Stocks with Questionable Fundamentals

August 20, 2025 at 00:38 AM EDT

POOL Cover Image

The performance of consumer discretionary businesses is closely linked to economic cycles. Over the past six months, it seems like demand trends are working against their favor as the industry has tumbled by 1.8%. This drawdown was disheartening since the S&P 500 gained 4.7%.

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

Pool (POOL)

Market Cap: $12.12 billion

Founded in 1993 and headquartered in Louisiana, Pool (NASDAQ: POOL) is one of the largest wholesale distributors of swimming pool supplies, equipment, and related leisure products.

Why Should You Sell POOL?

Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
Capital intensity will likely ramp up in the next year as its free cash flow margin is expected to contract by 2.4 percentage points
Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

Pool’s stock price of $324.91 implies a valuation ratio of 28.4x forward P/E. If you’re considering POOL for your portfolio, see our FREE research report to learn more.

Hasbro (HAS)

Market Cap: $11.23 billion

Credited with the creation of toys such as Mr. Potato Head and the Rubik’s Cube, Hasbro (NASDAQ: HAS) is a global entertainment company offering a diverse range of toys, games, and multimedia experiences for children and families.

Why Is HAS Risky?

Annual revenue declines of 3.1% over the last five years indicate problems with its market positioning
Poor expense management has led to operating margin losses
Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

At $78.95 per share, Hasbro trades at 17.6x forward P/E. To fully understand why you should be careful with HAS, check out our full research report (it’s free).

Polaris (PII)

Market Cap: $3.18 billion

Founded in 1954, Polaris (NYSE: PII) designs and manufactures high-performance off-road vehicles, snowmobiles, and motorcycles.

Why Are We Out on PII?

Annual revenue declines of 13% over the last two years indicate problems with its market positioning
Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 25.6% annually
Eroding returns on capital suggest its historical profit centers are aging

Polaris is trading at $55.77 per share, or 7.7x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why PII doesn’t pass our bar.

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3 Consumer Stocks with Questionable Fundamentals

Pool (POOL)

Hasbro (HAS)

Polaris (PII)

High-Quality Stocks for All Market Conditions

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