The performance of consumer discretionary businesses is closely linked to economic cycles. This sensitive demand profile can cause discretionary stocks to plummet when macro uncertainty enters the fray, and over the past six months, the industry has shed 12.7%. This drawdown was worse than the S&P 500’s 6.2% loss.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. Taking that into account, here is one consumer stock boasting a durable advantage and two that may face trouble.
Two Consumer Discretionary Stocks to Sell:
Brunswick (BC)
Market Cap: $3.00 billion
Formerly known as Brunswick-Balke-Collender Company, Brunswick (NYSE: BC) is a designer and manufacturer of recreational marine products, including boats, engines, and marine parts.
Why Should You Sell BC?
- Products and services have few die-hard fans as sales have declined by 13.8% annually over the last two years
- Capital intensity will likely ramp up in the next year as its free cash flow margin is expected to contract by 2.8 percentage points
- Waning returns on capital imply its previous profit engines are losing steam
At $45.66 per share, Brunswick trades at 10.4x forward P/E. Check out our free in-depth research report to learn more about why BC doesn’t pass our bar.
CBRE (CBRE)
Market Cap: $36.38 billion
Established in 1906, CBRE (NYSE: CBRE) is one of the largest commercial real estate services firms in the world.
Why Do We Steer Clear of CBRE?
- Sizable revenue base leads to growth challenges as its 8.3% annual revenue increases over the last five years fell short of other consumer discretionary companies
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 2.6% for the last two years
- Low returns on capital reflect management’s struggle to allocate funds effectively, and its falling returns suggest its earlier profit pools are drying up
CBRE’s stock price of $123.88 implies a valuation ratio of 20.2x forward P/E. If you’re considering CBRE for your portfolio, see our FREE research report to learn more.
One Consumer Discretionary Stock to Watch:
United Parks & Resorts (PRKS)
Market Cap: $2.44 billion
Parent company of SeaWorld and home of the world-famous Shamu, United Parks & Resorts (NYSE: PRKS) is a theme park chain featuring marine life, live entertainment, roller coasters, and waterparks.
Why Could PRKS Be a Winner?
- Highly efficient business model is illustrated by its impressive 26.7% operating margin
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Returns on capital are climbing as management makes more lucrative bets
United Parks & Resorts is trading at $44.30 per share, or 9x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out 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 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.
