The post Consumer Discretionary Stocks by Jacinta Sherris appeared first on Benzinga. Visit Benzinga to get more great content like this.
Invest in the best consumer discretionary stocks with Interactive Brokers for fast and easy execution.
The consumer discretionary stocks sector is made up of companies that manufacture products and provide services that consumers purchase on a discretionary basis, such as luxury apparel and household furniture or appliances. This sector includes some of the world’s most well-known and largest companies, such as Home Depot, McDonald’s, and Nike.
Stocks in the consumer discretionary sector, which are holistically represented by the Invesco S&P 500® Equal Wt Cnsm Disc ETF (RCD), have broadly outperformed the market as RCD has provided investors with a return of 41.09% over the past 12 months, above the S&P 500’s total returns of 31.13%.
Here are the top consumer discretionary stocks with the highest growth, greatest value, strongest momentum, and most searches on Google.
Contents
Overview: Consumer Discretionary Stocks
When you invest in these stocks, you invest in the American consumer. These stocks tend to perform exceptionally well when Americans spend money. However, when people tighten their budgets, these stocks may not fare as well.
These stocks are cyclical stocks. Stock prices tend to follow economic cycles of expansion, peak, contraction and recovery. Consumer discretionary companies see strong demand and sales during periods of economic expansion. This is because when people have more income, they tend to spend more money on apparel, jewelry, cars, entertainment, dining out, vacations, toys and gym memberships, among other things.
Consumer discretionary stock prices tend to underperform when the economy contracts. That said, there are many well-managed companies in this sector with a proven track record of steady returns even in the worst economic climates.
Best Online Brokers for Consumer Discretionary Stocks
It’s important to find the right broker that caters to your specific investing needs. Whether you value the most up-to-date research or low commission fees, these are some of the best picks.
Interactive Brokers is a comprehensive trading platform that gives you access to a massive range of securities at affordable prices. You can buy assets from all around the world from the comfort of your home or office with access to over 150 global markets. Options, futures, forex and fund trading are also available, and most traders won’t pay a commission on any purchase or sale.
IBKR is geared primarily toward experienced traders and investors but now with the availability of free trades with IBKR Lite, casual traders can also acclimate to IBKR’s offerings.
- Access to international markets
- Active traders
- Detailed mobile app that makes trading simple
- Wide range of available account types and tradeable assets
- IB SmartRouting provides significant price improvement vs. industry
- Fractional trading allows investing regardless of share price
- Industry’s lowest margin rates
- Earn more by lending your fuly-paid shares
- Beginner investors might prefer a broker that offers a bit more hand-holding and educational resources
80% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Plus500 is an online CFD broker focusing on contracts for difference (CFDs). CFDs are similar to binary options in the U.S. where traders take all-or-nothing speculation on the prices of certain securities like indices, commodities or currencies. While not legal to trade in the U.S., CFDs are legal in many jurisdictions across the globe and Plus500 offers a wide array of tradable markets using these instruments.
Plus500 doesn’t charge commission and only profits off the spread, which is the difference between the buy and sell price of a specific security. But Plus500 is not a broker for beginners — the education materials are sparse and CFDs are risky derivatives capable of sapping out all of an investor’s capital. Only trade these instruments if you understand how they operate and the risks involved with buying them.
The Plus500 CFD platform is for CFDs. The Plus500 Futures platform offers futures for U.S. customers, and Plus500 Invest offers stock trading.
- Traders looking for a smooth mobile experience
- Great mobile app
- Low spreads and commissions
- Unlimited demo account
- Only derivatives are available
- Not open to U.S. residents
Public is the only investing platform that lets you trade stocks, ETFs, crypto, bonds, options and alternative assets—like fine art and collectibles—all in one place. Public also provides access to custom company metrics, live shows about the markets, and insights from a community of millions of investors, creators, and analysts.
Today, Public provides more ways to create a diversified portfolio than nearly any other online broker. Members can engage in sophisticated investing strategies and access a wealth of investing insights—from company-specific analysis to live audio shows and town hall-style Q&As. In addition, Public offers a premium membership tier with unique company KPIs, detailed performance metrics, and institutional-grade research.
- Stock and ETF investors
- Crypto investors
- Investors looking to diversify with alternative assets or bonds and options
- Commission-free stock and ETF trading
- Fractional share investing
- Advanced data, tools, and insights with Public Premium
- You can’t transfer crypto to another wallet
- No mutual funds or precious metals
- At this time, only offers individual brokerage accounts and not IRAs
Robinhood is a popular trading platform known for its commission-free trades and user-friendly mobile app. Ideal for novice investors, Robinhood makes it easy to buy and sell stocks, ETFs and cryptocurrencies. The platform offers a straightforward, no-frills experience, making it accessible for users new to investing. With features like fractional shares and a sleek interface, Robinhood lowers the barriers to entry for investing, allowing users to start with just a few dollars. It lacks the advanced tools and research options that more experienced investors might seek. Overall, Robinhood is a great choice for beginners seeking a simple way to invest.
- Beginners looking for simplicity
- Mobile-first investors
- Commission-free trades
- User-friendly mobile app
- Instant double
- Cash management
- Access to cryptocurrencies
- Limited research tools
- No mutual funds available
- Basic customer support options
TradeZero is an online broker and free stock trading platform that provides everything you need to successfully share and trade, including round-the-clock customer support. TradeZero provides four different trading state-of-the-art software programs with its services, a locator for sourcing shares for shorting, commission-free trades, and real-time streaming, to name a few of the features promoted on their website. The software is a unique and (potentially) affordable option for anyone interested in stock trading.
- Traders seeking high transparency and mobility in a stock trading program
- Those attracted to commission-free trades
- Those seeking a free version of a high-quality trading program
- 24/7 live customer support
- Uses ZeroWeb technology, a powerful level 2 online platform with direct market access
- Mobile app allows users to access stocks and trade in real-time while on the go
- Enforces Pattern Day Trading restrictions (accounts need to maintain a daily equity balance of at least $25k)
- Mobile app could offer more features
Features to Look for in Consumer Discretionary Stocks
- Earnings per share: Be on the lookout for stocks with growing earnings per share (EPS). Positive and growing EPS is a signal of increasing profitability and higher profit margins. These factors can help a company claim more market share and hold its ground through an economic slowdown. EPS is calculated by subtracting preferred dividends from net income and then dividing the difference.
- Revenue growth: Revenue growth is the increase in sales from 1 period to another. This metric gives you an idea of how the company’s sales are growing and consumer demand. Robust revenue growth is a signal of customer loyalty, which can lead to more market share. Revenue growth is expressed as a percentage. It’s found on a company’s quarterly reports under “net revenue” or “net sales.”
- Dividend yield: The ability for a company to consistently return some of its profits to investors through dividends is a sign of strength and stability. This is especially true for consumer discretionaries that have been known to be sensitive to economic conditions. The dividend yield is the payout investors receive for owning 1 share of the company divided by the current stock price. It’s expressed as a percentage.
Managing the Volatility of Consumer Discretionary Stocks
Because these stocks follow the market, they tend to get a reputation for being volatile. While there is some truth to this generalization, it overlooks some key points about investing in these stocks.
If you choose a consumer discretionary stock with a strong customer base, sound financials and proven track record of revenue growth it will likely rebound and grow after a slowdown. The same way the economy bounces back from a lull — and so do the best consumer discretionary companies.
A good investment strategy is to buy these when the market contracts. This way you will position yourself better when the market rebounds. It’s also a good idea to wait out the storm and only sell your position when the market is back on top.
Often, the best consumer discretionary stocks are not the cheapest to buy into. If you’re looking to invest in growth stocks for a smaller amount, take a look at Benzinga’s picks for stocks under $5, stocks under $10 and stocks under $20.
All in all,these stocks may come with their fair share of volatility but the long-run returns can be well worth the hassle.
Frequently Asked Questions
What’s the best way to invest in consumer discretionary stocks?
Consumer discretionary stocks can be volitile, but if you choose a stock with a strong followinig, it will decrease your risk.
Are consumer discretionary stocks a long-term investment?
Yes, consumer discretionary stocks are best for long-term investments.
Which consumer discretionary stocks are the best?
Benzinga offers a list of the best consumer discretionary stocks on the list above.
Methodology
To create a specific set of companies and their respective stocks that fall under certain criteria, we utilized a screener to examine the top stocks under each criterion. For value companies, we analyzed the companies with the lowest forward P/E, current P/E, and P/E/G multiples; for growth companies, we analyzed high earnings and revenue growth – weighing them equally; for momentum, we looked at price growth in the past 52 weeks; for trending tech, we examined the stocks with the highest percent of search increment on Benzinga.
The post Consumer Discretionary Stocks by Jacinta Sherris appeared first on Benzinga. Visit Benzinga to get more great content like this.
