It’s safe to say the stock market is having a bullish week this week. And that makes it increasingly challenging to pick the best consumer discretionary stocks to buy. It’s no secret that consumer discretionary stocks are inherently cyclical investments. As a result, they typically rise and fall with the broader economic trends. After all, “discretionary” purchases are the non-essential expenses that take up a portion of your income.
Considering that the labor market steadily recovers from the COVID-19 pandemic, the economy appears to be at cruising speed recently. A rising inflation and a recovery of the economy toward pre-pandemic levels are the signals investors have picked up to justify their investments in consumer discretionary stocks. But more importantly, it may be worthwhile to look for stocks that are benefiting from the current economic conditions and have the potential to continue that momentum in the second half of 2021. With all that in mind, we have put up a list of top consumer discretionary stocks to watch in the stock market today.Top Consumer Discretionary Stocks To Watch
- Nike Inc. (NYSE: NKE)
- Peloton Interactive Inc. (NASDAQ: PTON)
- American Eagle Outfitters Inc. (NYSE: AEO)
- Walt Disney Co. (NYSE: DIS)
- General Motors Co. (NYSE: GM)
First up, Nike is a juggernaut when it comes to athletic apparel and footwear. The company released its fourth-quarter earnings on Thursday, topping Wall Street’s estimates. The Oregon-based company saw its revenue surge to $12.34 billion from $6.31 billion from the prior-year period. It also offered a better-than-expected sales outlook for the upcoming year. This is primarily driven by optimism around the women’s category, apparel business, and Jordan brand.
As we moved through the pandemic, Nike saw its sales more than doubled to a record $5.38 billion in its biggest North American market. The management is also seeing improvement internationally. In particular, China is showing positive growth sequentially month by month. The company’s investment in technology and its transformation into a digital-first company were also on full display. Digital sales were up 41% compared with the prior year and rose a whopping 147% compared with the same period in 2019. With such impressive financials, NKE stock could come up as one of the top gainers in the stock market today.Source: TD Ameritrade TOS
Read MorePeloton Interactive Inc.
Another consumer discretionary name that is trending in the stock market is Peloton Interactive. The company made a name for itself for selling stationary exercise bicycles and treadmills during the pandemic. For the uninitiated, the company’s leading interactive fitness platform is used by millions of members around the world today. In essence, it has pioneered connected, technology-enabled fitness and the streaming of immersive instructor-led classes for its members.
The company is also starting to offer subsidized access to its workout app through the Peloton Corporate Wellness program. Businesses and organizations operating in the U.S., U.K., Canada, and Germany are among the countries that will be able to join in this program. Some experts are shying away from PTON stock because the reopening of the economy also means that gyms and other physical sport activities could slowly resume. And that might spell trouble for Peloton’s home work-out equipment sales. But there is also a chance that consumers appreciate the convenience of working out from home. With all this being said, would you add PTON stock to your watchlist right now?Source: TD Ameritrade TOS American Eagle Outfitters Inc.
Apart from Nike, another apparel company to have on your watchlist is American Eagle Outfitters (AEO). The apparel retailer is one of the few that survived and came out stronger from the pandemic. It weathered through the retail apocalypse by selling more popular jeans and expanding its lingerie and activewear brand, Aerie. Of course, the company wouldn’t be able to do so well financially without investing in its digital channel, which brought in 40% of sales last quarter.
Through its e-commerce division, the company’s merchandise is available at over 200 international locations and ships to 81 countries worldwide. As with most retailers, AEO appears to be firing on all cylinders now as shoppers are also returning to the mall in droves. From its first-quarter earnings, the company reported solid figures across the board. Specifically, AEO posted a total revenue of $1.03 billion for the quarter, marking a significant 87% increase year-over-year. As AEO continues to open new stores and expands its e-commerce platform, is AEO stock a potential multibagger in the making?Source: TD Ameritrade TOS Walt Disney Co.
Disney is a diversified multinational mass media and entertainment conglomerate that is based in California. The company established itself as a leader in the American animation industry before diversifying into live-action film production, television, and theme parks. Despite being hit by the pandemic in 2020, the company has invested significantly into its Disney+ subscription service, with dedicated content hubs for Disney, Pixar, Marvel, Star Wars, and National Geographic.
From its second-quarter fiscal 2021 reported last month, total revenues for the quarter were $15.61 billion. Meanwhile, diluted earnings per share from continuing operations for the quarter increased by 92% year-over-year to $0.50. With the pandemic seemingly coming to a close, investors are also banking on DIS stock hoping for a bump in its parks and hospitality related revenues. While a lot of the resources have been deployed to its streaming division, it is obvious that other segments of the company could benefit when the economy fully reopens. If you have a long-term investing horizon, would you invest in DIS stock?Source: TD Ameritrade TOS General Motors Co.
While high-profile electric vehicle stocks may get more of the attention these days, General Motors is not sitting on the sidelines either. In fact, GM is not only pushing into the EV market, but also invests heavily in autonomous vehicle technology. Of course, GM is no Tesla (NASDAQ: TSLA). But that doesn’t mean GM can’t be one of the best consumer discretionary stocks for investors looking to gain exposure in the automotive space.
If we’re to compare the stock performance among top EV stocks, GM handily outperformed Wall Street’s favorite EV stocks, namely Tesla and Nio (NYSE: NIO). The company’s stock price is seeing gains of nearly 50% year to date. General Motors recently unveiled its plan on increasing its EV and AV investments from 2020 through 2025 to $35 billion. This represents a 75% bump from its initial commitment announced before the pandemic. If you believe that GM will take up sizable market shares in the EV space, is now the time to bet on GM stock?Source: TD Ameritrade TOS