Consumer discretionary businesses are levered to the highs and lows of economic cycles. Thankfully for the industry, all signs are pointing up as discretionary stocks have gained 19.1% over the past six months, beating the S&P 500’s 14.1% return.
Nevertheless, this stability can be deceiving as many companies in this space lack recurring revenue characteristics and ride short-term fads. On that note, here are three consumer stocks we’re passing on.
fuboTV (FUBO)
Market Cap: $987 million
Originally launched as a soccer streaming platform, fuboTV (NYSE: FUBO) is a video streaming service specializing in live sports, news, and entertainment content.
Why Should You Dump FUBO?
- Performance surrounding its domestic subscribers has lagged its peers
- Poor expense management has led to operating margin losses
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 0.7% for the last two years
fuboTV is trading at $2.89 per share, or 96.7x forward P/E. Dive into our free research report to see why there are better opportunities than FUBO.
FOX (FOXA)
Market Cap: $27.76 billion
Founded in 1915, Fox (NASDAQ: FOXA) is a diversified media company, operating prominent cable news, television broadcasting, and digital media platforms.
Why Do We Avoid FOXA?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 5.9% for the last five years
- Free cash flow margin is forecasted to shrink by 11.2 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
- Stagnant returns on capital show management has failed to improve the company’s business quality
FOX’s stock price of $66.25 implies a valuation ratio of 14.5x forward P/E. Check out our free in-depth research report to learn more about why FOXA doesn’t pass our bar.
Mohawk Industries (MHK)
Market Cap: $7.08 billion
Established in 1878, Mohawk Industries (NYSE: MHK) is a leading producer of floor-covering products for both residential and commercial applications.
Why Do We Think MHK Will Underperform?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Free cash flow margin is projected to show no improvement next year
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
At $114.57 per share, Mohawk Industries trades at 11.6x forward P/E. If you’re considering MHK for your portfolio, see our FREE research report to learn more.
Stocks We Like More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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