Consumer discretionary businesses are levered to the highs and lows of economic cycles. Over the past six months, it seems like demand may be facing some headwinds as the industry’s 6.2% return has lagged the S&P 500 by 4.8 percentage points.
While some companies have durable competitive advantages that enable them to grow consistently, the odds aren’t great for the ones we’re analyzing today. Keeping that in mind, here are three consumer stocks best left ignored.
Figs (FIGS)
Market Cap: $2.44 billion
Rising to fame via TikTok and founded in 2013 by Heather Hasson and Trina Spear, Figs (NYSE: FIGS) is a healthcare apparel company known for its stylish approach to medical attire and uniforms.
Why Should You Sell FIGS?
- Sluggish trends in its active customers suggest customers aren’t adopting its solutions as quickly as the company hoped
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 10.7% for the last two years
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
At $14.85 per share, Figs trades at 40.6x forward P/E. Read our free research report to see why you should think twice about including FIGS in your portfolio.
Nike (NKE)
Market Cap: $60.47 billion
Originally selling Japanese Onitsuka Tiger sneakers as Blue Ribbon Sports, Nike (NYSE: NKE) is a global titan in athletic footwear, apparel, equipment, and accessories.
Why Do We Steer Clear of NKE?
- Weak constant currency growth over the past two years indicates challenges in maintaining its market share
- Poor free cash flow margin of 5.9% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Nike is trading at $40.78 per share, or 23.3x forward P/E. Dive into our free research report to see why there are better opportunities than NKE.
News Corp (NWSA)
Market Cap: $17.2 billion
Established in 2013 after a restructuring, News Corp (NASDAQ: NWSA) is a multinational conglomerate known for its news publishing, broadcasting, digital media, and book publishing.
Why Are We Bearish on NWSA?
- Flat sales over the last five years suggest it must innovate and find new ways to grow
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- Returns on capital haven’t budged, indicating management couldn’t drive additional value creation
News Corp’s stock price of $30.41 implies a valuation ratio of 22.2x forward P/E. If you’re considering NWSA for your portfolio, see our FREE research report to learn more.
Stocks We Like More
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
