- Offering growth potential, trend exposure and dividends, these stocks cater to investors seeking dynamic opportunities.
- The consumer discretionary sector's resilience, driven by growth and sustained consumer confidence, sets the stage for a promising year-end performance.
- Despite potential risks like inflation and geopolitical tensions, positive consumer spending trends and future growth paths paint a favorable picture for the sector.
- 5 stocks we like better than General Motors
Consumer discretionary stocks in 2023 present a captivating blend of potential growth, trend exposure and enticing dividends. As we research the best consumer discretionary stocks for the year's second half, we find that these stocks appeal to investors seeking dynamic investment opportunities.
Let’s look at the top consumer discretionary stocks for the remainder of 2023. We will unravel the unique narratives behind these stocks while providing insights into their opportunities and challenges.
Overview of consumer discretionary stocks at the end of 2023
In 2023, the consumer discretionary sector stood resilient and is expected to maintain that hardiness until the end of the year. Essential contributing factors strengthened this display of performance:
- Economic expansion: During a projected 4.9% real GDP growth in the U.S., heightened disposable incomes fueled a surge in expenditures on non-essential goods and services.
- Sustained consumer confidence: Despite inflation concerns and potential interest rate hikes, robust labor conditions and higher wages maintained consumers' optimism.
- Robust holiday spending: The 2023 holiday season is expected to witness exceptional consumer spending on non-essential items, reflecting both post-pandemic demand and robust retail promotions.
Short-term prospects for consumer discretionary stocks appear promising. With a forecast of continued economic growth, sustained consumer confidence and a robust labor market, consumer spending on non-essentials is expected to persist into 2024.
Moreover, long-term trends, including the burgeoning e-commerce sector landscape, the emphasis on experiential spending and tailored retail experiences, all bode well for the consumer discretionary sector.
While the outlook remains positive, several risks warrant your close attention:
- Inflation: Escalating inflation could erode consumer purchasing power, potentially curbing spending.
- Interest rates: Anticipated interest rate hikes in 2024 might escalate borrowing costs for consumers and businesses alike.
- Geopolitical uncertainty: Ongoing geopolitical tensions, like the conflicts in Ukraine and Israel, pose potential threats by the possibility of unsettling consumer sentiment.
The consumer discretionary stocks sector shows promise in the near term, yet investors are advised to weigh these risks against their risk tolerance before making investment decisions.
Benefits of investing in consumer discretionary stocks
What are the benefits of investing in consumer discretionary stocks? Let's take a look:
- Potential for higher returns through growth: Consumer discretionary stocks can offer high growth potential, as the companies that produce non-essential goods and services may see increased demand during periods of economic growth. These cyclical stocks show enhanced returns when the consumer market is strong. As the economy grows and consumers have more disposable income, they tend to spend more on discretionary items.
- Exposure to consumer trends: Consumer discretionary stocks can expose investors to changing consumer trends and preferences, such as shifts towards sustainable or digital products.
- May pay dividends: The best consumer discretionary stocks may also pay dividends in addition to providing higher growth rates, providing an attractive return rate to investors.
Downsides of investing in consumer discretionary stocks
It's worth noting the downsides of investing in consumer discretionary stocks before you choose this investment option:
- Economic sensitivity: Consumer discretionary stocks are sensitive to economic and consumer behavior changes. When the economy is weak, or consumers are cutting back on spending, consumer discretionary stocks may suffer. These downturns may happen suddenly, resulting in losses that occur as quickly as any gains you see.
- Competition: The consumer discretionary sector is highly competitive, with many companies vying for limited market share. Competition can pressure profit margins and limit your growth potential as an investor.
15 best consumer discretionary stocks
This curated selection showcases fifteen noteworthy consumer discretionary stocks that have made a mark in the investment landscape of 2023. These companies represent diverse sectors within the consumer market, offering unique perspectives and promising trajectories.
From established giants like Amazon and Tesla to esteemed brands such as LVMH Moet Hennessy and Nike, these stocks exemplify the breadth and significance of the consumer discretionary sector. Let's dig into these 15 stocks, offering you a comprehensive view of the key players in the consumer discretionary landscape of 2023.
Amazon.com Inc. NASDAQ: AMZN is a titan of the e-commerce and cloud computing industries, making it a compelling investment choice for 2023 and beyond. Its dominance in online shopping, with over 38% of the U.S. e-commerce market, has revolutionized how consumers shop.
Its cloud computing arm, Amazon Web Services (AWS), is the world's leading provider, capturing over 32% of the global market. Amazon's diverse portfolio extends beyond e-commerce and cloud computing, with growing businesses in advertising, digital streaming and logistics, providing multiple avenues for future growth.
The company's financial performance has been stellar, generating over $514 billion in revenue and $21.3 billion in net income. Amazon's influence on the consumer discretionary sector is undeniable, setting the standard for e-commerce convenience and customer experience. Its growth prospects are immense, with the e-commerce market expected to continue expanding and AWS well-positioned to maintain its cloud computing leadership.
Amazon is expanding its international presence, exploring new technologies and continuously expanding its range of services, catering to the growing demand for cloud-based solutions. Its advertising business is also poised for significant growth as businesses shift their advertising budgets online.
Tesla Inc. NASDAQ: TSLA stands out as a revolutionary force in the automotive industry, pioneering electric vehicle (EV) technology and redefining the future of transportation. Its unwavering commitment to innovation, its expanding product portfolio, and its global reach solidify its position as a top consumer discretionary stock for 2023 and beyond.
At the forefront of the EV revolution, Tesla has captivated consumers with its sleek designs, impressive performance and advanced technology. Its Model S sedan has consistently topped rankings for luxury vehicles, while the Model 3 has set the benchmark for affordable EVs. Tesla's commitment to sustainability resonates with environmentally conscious consumers, making it a brand of choice for those seeking to reduce their carbon footprint.
Tesla is expanding its product portfolio, venturing into new markets with immense growth potential. Its energy storage solutions, including Powerwall and Powerpack, offer homeowners and businesses reliable and sustainable energy storage options. Additionally, Tesla's foray into autonomous driving technology, with its Autopilot and Full Self-Driving Capability features, positions it at the forefront of automotive innovation.
Tesla's global reach is rapidly expanding, with production facilities in the United States, China and Germany. The company is actively expanding its Supercharger network, providing convenient charging infrastructure for its growing EV fleet. This global presence allows Tesla to tap into new markets and cater to the diverse needs of consumers worldwide.
LVMH Moet Hennessy Louis Vuitton SE
LVMH Moet Hennessy Louis Vuitton SE OTCMKTS: LVMUY stands as a pinnacle of luxury goods, encompassing renowned brands like Louis Vuitton, Dior and Fendi. Its unwavering commitment to craftsmanship, heritage and brand exclusivity has cemented its position as a top consumer discretionary stock for 2023 and beyond.
LVMH's allure lies in its ability to blend tradition with innovation, creating timeless products with luxury and sophistication. Its craftsmanship is unparalleled, with artisans meticulously crafting each piece to the highest standards. This commitment to quality ensures that LVMH products remain coveted by discerning clientele worldwide.
LVMH's heritage plays a pivotal role in its success. Its brands, such as Louis Vuitton and Hennessy, have been synonymous with luxury for generations, establishing an aura of prestige and desirability. LVMH carefully preserves this heritage while embracing innovation to remain relevant and appealing to modern consumers.
LVMH's brand exclusivity is a key differentiator. Its products are not mass-produced; they are carefully crafted in limited quantities, adding to their allure and appeal. This exclusivity creates a sense of aspiration and desire among consumers, driving demand for LVMH's products.
The Home Depot Inc.
The Home Depot Inc. NYSE: HD, the largest home improvement retailer in the United States, is a beacon of resilience and growth in the consumer discretionary sector. Its comprehensive product selection, unwavering commitment to customer satisfaction, and strategic expansion plans solidify its position as a top consumer discretionary stock for 2023 and beyond.
Home Depot's success hinges on its ability to cater to the diverse needs of homeowners, offering an extensive range of products encompassing everything from tools and hardware to appliances and flooring. Its convenient store locations and robust online presence ensure that customers can easily access the products they need, whether embarking on a major renovation or tackling small DIY projects.
Home Depot is renowned for its exceptional customer service. Its knowledgeable staff is always eager to assist customers, providing expert advice and guidance throughout their home improvement endeavors. This commitment to customer satisfaction has fostered a loyal customer base, driving repeat business and fueling the company's growth.
Home Depot is actively expanding its footprint, both domestically and internationally. The company is strategically opening new stores in underserved markets, expanding its reach to new customers and tapping into untapped growth potential. Additionally, Home Depot is venturing into new markets, such as Mexico, further diversifying its business and positioning itself for global success.
Nike Inc. NYSE: NKE, the iconic sportswear brand, remains a dominant force in the consumer discretionary sector, fueled by its unwavering dedication to innovation, brand strength and global reach. Its ability to seamlessly blend style and performance has captivated athletes and fashion enthusiasts worldwide, solidifying its position as a top consumer discretionary stock for 2023 and beyond.
Nike's innovation prowess is evident in its cutting-edge footwear and apparel designs, constantly pushing the boundaries of performance and style. Its flagship footwear technologies, such as Air and Zoom Air, have revolutionized athletic performance, while its apparel designs seamlessly transition from the field to the streets. This ability to bridge the gap between athleticism and everyday wear has expanded Nike's reach beyond traditional sporting boundaries.
Beyond its innovative products, Nike's brand strength is unparalleled. The iconic swoosh logo is instantly recognizable worldwide, symbolizing athletic excellence and style. Nike's strategic partnerships with renowned athletes and teams further enhance its brand appeal, creating a sense of aspiration and loyalty among consumers.
Nike's global reach is extensive, with operations spanning over 190 countries. This global presence allows Nike to cater to the diverse needs of consumers worldwide, adapting its products and marketing strategies to local tastes and preferences. Nike's expanding presence in emerging markets, such as China and India, also provides significant growth opportunities.
Starbucks Co. NASDAQ: SBUX, the global coffeehouse giant, epitomizes the enduring power of brands and the resilience of the consumer discretionary sector. Its unwavering commitment to premium coffee, customer experience and global expansion has cemented its position as a top consumer discretionary stock.
Starbucks' success comes from its ability to elevate the coffee experience, offering customers more than just a cup of caffeine. Its premium coffee beans, crafted with care and expertise, form the foundation of its beverages. This commitment to quality has cultivated a loyal customer base that appreciates Starbucks's consistent and superior taste.
Starbucks excels in creating a welcoming and engaging customer experience. Its cozy atmosphere, friendly baristas and inviting ambiance have transformed its stores into community hubs where people gather to connect, work, or simply enjoy a moment of respite. This focus on customer experience has fostered a strong emotional connection with its patrons.
Starbucks is actively expanding its global footprint, reaching new markets and establishing itself as a ubiquitous coffee destination. Its strategic partnerships with local companies allow it to tailor its offerings to local tastes and preferences, ensuring relevance in diverse markets. Additionally, Starbucks is leveraging technology to enhance its customer experience, introducing mobile ordering and payment options for added convenience.
McDonald's Co. NYSE: MCD, the iconic fast-food giant, showcases the enduring appeal of convenience and value in the consumer discretionary sector. Its unwavering commitment to operational efficiency, menu innovation and global expansion has cemented its position as a top consumer discretionary stock for 2023 and beyond.
McDonald's success hinges on its ability to provide customers with quick, convenient, affordable meals. Its streamlined operations, standardized processes and efficient supply chain enable it to serve a high volume of customers quickly and consistently. This focus on operational efficiency ensures that McDonald's remains a go-to destination for those seeking a hassle-free meal option.
McDonald's constantly innovates its menu, adapting to changing consumer tastes and preferences. Its introduction of healthier options, such as salads and wraps, has broadened its appeal to a wider range of customers. Additionally, McDonald's is experimenting with new technologies, such as self-ordering kiosks and mobile ordering, to enhance the customer experience and keep pace with evolving trends.
McDonald's is aggressively expanding its global footprint, reaching new markets and establishing itself as a ubiquitous fast-food destination. Its strategic partnerships with local companies allow it to tailor its menu and marketing strategies to local tastes and preferences, ensuring relevance in diverse markets. Additionally, McDonald's is leveraging its global scale to negotiate favorable pricing from suppliers, further enhancing its profitability.
The TJX Companies Inc.
The TJX Companies Inc. NYSE: TJX, the off-price apparel and home fashion retailer, is a testament to the enduring appeal of value and treasure hunting in the consumer discretionary sector. Its unwavering commitment to providing a curated selection of branded merchandise at attractive prices has cemented its position as a top consumer discretionary stock for 2023 and beyond.
TJX Companies' relies on its ability to source high-quality, branded merchandise at discounted prices. Its buyers scour the market for closeouts, overstocks and canceled orders, acquiring merchandise at a fraction of its original wholesale cost. This keen eye for value allows TJX Companies to offer its customers a diverse selection of brand-name products at significantly lower prices than those found at traditional department stores.
TJX Companies creates a unique shopping experience that appeals to treasure hunters and bargain enthusiasts. Its stores are packed with merchandise, offering a sense of discovery and the thrill of finding unexpected deals. This treasure hunt atmosphere has cultivated a loyal customer base who enjoy the thrill of the hunt and the satisfaction of finding great deals.
TJX Companies is actively expanding its global footprint, reaching new markets and establishing itself as a leader in the off-price retail sector. Its strategic acquisitions of international brands, such as Winners and Homesense, have broadened its reach and allowed it to cater to diverse consumer preferences worldwide. Additionally, TJX Companies is leveraging its global scale to optimize its supply chain and negotiate favorable pricing from suppliers, further enhancing its profitability.
The Walt Disney Company
The Walt Disney Company NYSE: DIS, the entertainment giant, showcases the enduring power of storytelling and the resilience of the consumer discretionary sector. Its unwavering commitment to creating high-quality content, expanding its global reach and embracing new technologies has cemented its position as a top consumer discretionary stock for 2023 and beyond.
Disney's success is its ability to create captivating stories and characters that resonate with audiences worldwide. Its iconic franchises, such as Star Wars, Marvel and Disney Princesses, have transcended generations, captivating fans of all ages through films, television shows and theme parks. This ability to connect with audiences on an emotional level has fostered a strong brand loyalty that drives demand for Disney's products and experiences.
Disney constantly expands its global reach, establishing itself as a ubiquitous entertainment destination. Its strategic acquisitions, such as Pixar and 21st Century Fox, have broadened its content portfolio and enhanced its international presence. Additionally, Disney is leveraging its global scale to negotiate favorable distribution deals and maximize the reach of its content.
Disney is embracing new technologies to enhance its storytelling and create immersive experiences for its audiences. Its streaming service, Disney+, has emerged as a major player in the streaming wars, offering a vast library of Disney content and attracting a loyal subscriber base. Disney is also investing in virtual and augmented reality technologies to create new and innovative entertainment experiences.
Lululemon Athletica Inc.
Lululemon Athletica Inc. NASDAQ: LULU is a renowned athletic apparel company. Its unwavering commitment to high-quality, performance-driven apparel, strong brand reputation, and expanding global reach land it a spot on our list.
Lululemon's creates premium athletic apparel that seamlessly blends style and functionality. Its signature fabrics, such as Luxtreme and Nulu, are renowned for their durability, comfort and sweat-wicking capabilities, making them a favorite among athletes and fitness enthusiasts. This focus on quality has cultivated a loyal customer base that appreciates the superior craftsmanship and performance benefits of Lululemon products.
Lululemon has established a strong brand reputation for its focus on community, inclusivity and sustainability. Its 'Sweatlife' initiative fosters a sense of belonging and camaraderie among Lululemon enthusiasts, while its commitment to using sustainable materials and ethical manufacturing practices resonates with environmentally conscious consumers. This strong brand positioning has expanded Lululemon's appeal beyond the athletic realm, making it a popular choice for everyday wear and casual outings.
Lululemon is actively expanding its global footprint, reaching new markets and establishing itself as a ubiquitous athletic apparel brand. Its strategic partnerships with local retailers in Asia and Europe have broadened its reach and allowed it to cater to diverse consumer preferences worldwide. Additionally, Lululemon is investing in e-commerce and digital marketing to enhance its online presence and reach a wider customer base.
The Estee Lauder Companies Inc.
The Estee Lauder Companies Inc. NYSE: EL is a global leader in prestige beauty products. The company is a testament to the enduring appeal of self-care. Its unwavering commitment to innovation, brand strength and global reach is why we have included it on our list.
Estee Lauder thrives on its ability to create innovative and high-quality beauty products that cater to diverse needs and desires. Its extensive portfolio of brands, including Estee Lauder, Clinique, MAC Cosmetics and Bobbi Brown, encompasses a wide range of skincare, makeup and fragrance products, appealing to a broad spectrum of consumers. This commitment to innovation has cultivated a loyal customer base who appreciate the effectiveness and prestige of Estee Lauder's products.
Estee Lauder has established a strong brand reputation for its commitment to luxury and sophistication. Its iconic brands are synonymous with quality, glamour and timeless elegance, making them coveted by consumers worldwide. This strong brand positioning has expanded Estee Lauder's reach beyond traditional retail channels, establishing its presence in luxury department stores, specialty beauty stores and e-commerce platforms.
Estee Lauder is actively expanding its global footprint, reaching new markets and establishing itself as a ubiquitous beauty destination. Its strategic acquisitions of emerging brands, such as The Ordinary and Deciem, have broadened its appeal to younger generations and expanded its presence in the digital beauty space. Additionally, Estee Lauder is investing in international expansion, particularly in Asia and Latin America, to capitalize on the growing demand for prestige beauty products in these regions.
Costco Wholesale Corporation
Costco Wholesale Corporation NASDAQ: COST is a membership-only warehouse club. Its unwavering commitment to providing high-quality products at unbeatable prices and its focus on customer satisfaction and operational efficiency have cemented its position as a top consumer discretionary stock for 2023 and beyond.
Costco's unique business model revolves around offering a curated selection of high-quality merchandise at consistently low prices. By limiting its product offerings and negotiating favorable deals with suppliers, Costco can pass on significant savings to its members, who pay an annual membership fee to access these benefits. This value proposition has attracted loyal customers who appreciate Costco's commitment to quality and affordability.
Beyond its value proposition, Costco is renowned for its exceptional customer satisfaction and operational efficiency. Its spacious warehouses, friendly staff and hassle-free return policy create a positive shopping experience for its members. Additionally, Costco is committed to lean operations, minimizing costs and maximizing efficiency throughout its supply chain and distribution network. This focus on customer satisfaction and operational efficiency has solidified Costco's reputation as a reliable and customer-centric retailer.
Costco is actively expanding its global footprint, reaching new markets and establishing itself as a ubiquitous warehouse club destination. Its strategic expansion into international markets, such as China and Europe, has broadened its reach and allowed it to cater to diverse consumer preferences worldwide. Additionally, Costco is investing in e-commerce and digital marketing to enhance its online presence and reach a wider customer base.
PepsiCo Inc. NASDAQ: PEP is a global food and beverage giant that exemplifies the appeal of convenient and refreshing products. PepsiCo has an unwavering commitment to innovation, brand strength and global reach, which is why we have included it on our list.
PepsiCo's creates and markets iconic food and beverage brands that resonate with consumers worldwide. Its portfolio of brands, including Pepsi, Lay's, Gatorade and Quaker, encompasses a wide range of snacks, beverages and food products, catering to diverse tastes and preferences. This brand strength has cultivated a loyal customer base that desires the consistent quality, taste, and convenience of PepsiCo's products.
PepsiCo has established a strong brand reputation for its commitment to sustainability and social responsibility. Its initiatives to reduce its environmental impact, promote healthy lifestyles and support communities have resonated with consumers, particularly those seeking to make conscious choices. This commitment to sustainability and social responsibility has enhanced PepsiCo's brand image and expanded its appeal to a wider range of consumers.
PepsiCo is actively expanding its global footprint, reaching new markets and establishing itself as a ubiquitous food and beverage destination. Its strategic acquisitions of emerging brands, such as Tropicana and Naked, have broadened its appeal to health-conscious consumers and expanded its presence in the juice and wellness categories. Additionally, PepsiCo is investing in emerging markets, particularly in Asia and Latin America, to capitalize on the growing demand for convenient and branded food and beverage products in these regions.
Procter & Gamble Co.
The Procter & Gamble Co. NYSE: PG is a consumer goods giant, and it speaks to the enduring power of household staples and the resilience of the consumer discretionary sector. Procter & Gamble creates and markets essential household products that consumers rely on daily. Its portfolio of brands, including Tide, Pampers, Gillette and Oral-B, encompasses a wide range of personal care, cleaning and baby care products, catering to diverse needs and preferences.
Procter & Gamble has established a strong brand reputation for its commitment to sustainability and innovation. Its initiatives to reduce its environmental impact, develop sustainable packaging solutions and invest in renewable energy have resonated with consumers, particularly those seeking to make conscious choices. This commitment to sustainability and innovation has enhanced Procter & Gamble's brand image and expanded its appeal to a wider range of consumers.
Procter & Gamble is actively expanding its global footprint, reaching new markets and establishing itself as a ubiquitous destination for household products. Its strategic acquisitions of emerging brands, such as Natural Products Group and The Art of Shaving, have broadened its appeal to natural and organic consumers and expanded its presence in the beauty and grooming categories. Additionally, Procter & Gamble is investing in emerging markets, particularly in Asia and Latin America, to capitalize on the growing demand for branded household products.
The Coca-Cola Company
The Coca-Cola Company NYSE: KO is an iconic beverage giant. Coca-Cola's success relies on its ability to create and market refreshing beverages that resonate with consumers worldwide. Its flagship product, Coca-Cola, remains the world's most popular soft drink. At the same time, its portfolio of brands, including Diet Coke, Sprite and Fanta, encompasses a wide range of flavors and options to cater to diverse tastes and preferences.
Coca-Cola has established a strong brand reputation for its sustainability and social responsibility commitment. Its initiatives to reduce its environmental impact, empower communities and promote healthy lifestyles have resonated with consumers, particularly those seeking to make conscious choices. This commitment to sustainability and social responsibility has enhanced Coca-Cola's brand image and expanded its appeal to a wider range of consumers.
Coca-Cola is actively expanding its global footprint, reaching new markets and establishing itself as a ubiquitous beverage destination. Its strategic partnerships with local bottlers and distributors allow it to tailor its product offerings and marketing strategies to local tastes and preferences, ensuring relevance in diverse markets. Additionally, Coca-Cola is investing in emerging markets, particularly in Asia and Africa, to capitalize on the growing demand for branded beverages in these regions.
Tips for investing in consumer discretionary stocks
Adding a few consumer discretionary stocks to your portfolio can be rewarding, but it's essential to do your research before investing. Use the following tips before choosing which assets to buy and sell.
- Understand the industry: Consumer discretionary stocks are closely linked to the state of the economy. These stocks tend to perform well when consumers have higher disposable income and are confident about the future, but they present the most economic opportunities when times are tough. It's important to understand the industry and the current economic conditions before investing to find an ideal entry point.
- Identify companies with potential: When you think it's time to buy, research and identify stocks that are the key players in the industry. Look for companies with strong brand recognition, innovative products and growth history. This will help you identify potential investments that will likely perform well over the long term. You can use the MarketBeat stock screener to refine your search and make sorting assets easier.
- Keep track of changing company valuation and consumer trends: Keep track of companies' earnings reports to understand their financial performance. Look for companies that consistently report strong earnings growth and add these companies to your portfolio for long-term holds.
Consider investing in consumer discretionaries
While consumer discretionary stocks can provide valuable opportunities to investors, it's important to remember that these stocks show higher levels of volatility, which can impact you disproportionately in times of economic loss. Be sure to fully diversify your portfolio with a series of consumer staple additions or ETFs to maintain stability during these periods and better avoid panic selling.
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