Is Consumer Discretionary a Dead End? These 3 Stocks Say No

Key Points

• Though consumer discretionary stocks as a group may face significant challenges in the 2025 market environment, some individual names are especially promising.
• Three stocks in the niche packaging industry may be compelling to investors.
• Companies like Greif, O-I, and Silgan have carved out crucial positions in the sector, allowing them more stability and growth opportunities even when risks loom.

Conventional investor wisdom holds that the consumer discretionary sector performs best when the economy is thriving and customers have money to spend. Low interest rates and strong job growth may be other important indicators of a potential boom in consumer discretionary companies.

With those things in mind, investors might expect that stocks in the consumer discretionary sector would be a non-starter in mid-2025. After all, a recent employment situation report from the U.S. Bureau of Labor Statistics showed only 139,000 jobs added in May 2025, down significantly from 272,000 added in May 2024.

Interest rates have been persistently high, and consumer confidence remains mixed at best. The Consumer Discretionary Select Sector SPDR Fund NYSEARCA: XLY, an exchange-traded fund (ETF) representing a wide swath of the sector, is down more than 2% year-to-date (YTD), even while the broader S&P 500 is up 3%.

Dependable, Steady Performance Alongside Strong Dividend and Protection From Tariffs

Greif Inc. NYSE: GEF manufactures industrial packaging, corrugated sheets, paperboard, and similar products. Though it is a consumer discretionary company, Greif's versatile product line allows it to benefit from client activity across a host of industries and many sectors.

The company is also extraordinarily well-established, having been in business for nearly 140 years, and this stability makes it possible for Greif to pay a dividend with a healthy dividend yield of 3.36% and a strong payout ratio of 60.85%.

What may attract investors to Greif most at this point, however, is the company's recent performance. Despite huge challenges across the market, Greif is proof that dependability can still generate strong—if not exceptional—results. The company's earnings per share of $1.19 beat analyst predictions by 11 cents, while quarterly revenue rose just over 1% year-over-year (YOY) as well. This was about the same as the YOY growth in net sales.

Although neither top nor bottom-line gains were significant, they reflect success in Greif's efforts to optimize costs. The company expects to achieve $25 million in savings this fiscal year and $100 million by the end of fiscal 2027.

Greif is also insulated from the negative impact of tariffs thanks to its locally-focused operational structure. Though it has a footprint in dozens of countries, Greif's products are mostly sold close to where they are manufactured, saving it from high tariff costs as goods cross borders.

Successful Strategic Initiative Leads to Strong Results and Optimistic Guidance

Like Greif above, O-I Glass Inc. NYSE: OI has a history of more than 100 years as a packaging manufacturer. In the case of O-I, however, its products include glass containers for the food and beverage industry. With customers increasingly concerned about the use of plastics in food service, glass may be poised for increasing demand, benefiting O-I.

Announced last year, O-I's ambitious Fit to Win program, seeking to make operations more efficient and improve profitability by decentralizing, streamlining supply chains, engaging in stringent capital management, and more, has been a success. Adjusted EPS of 40 cents per share for the first quarter of 2025 topped analyst predictions by a full 22 cents, and O-I announced $61 million in benefits related to the Fit to Win program alone.

The company is optimistic about future quarters, projecting adjusted earnings for 2025 to surge as much as 85% above 2024 levels. Analysts generally share this sentiment, as the company has six Buy ratings against two Holds and an expected upside potential of more than 16%.

Executive Turnover Not Enough to Quell Analyst Bullishness

Like the two companies above, Silgan Holdings Inc. NYSE: SLGN is also involved in a niche corner of the packaging industry. Silgan makes metal and plastic closures, metal containers, and similar products for many different applications.

Silgan is also coming off a fairly strong earnings report earlier in the year. Although top-line performance didn't quite meet expectations (despite over 11% YOY improvement in revenue), EPS of 82 cents per share came in 4 cents over predictions.

Despite its advantageous position in the packaging industry, Silgan may be a somewhat less certain bet than the firms above. The president of the company's U.S. metal containers business, Silgan Containers, resigned in early June, introducing an element of uncertainty into a key portion of the larger company's operations.

Still, there is strong optimism among analysts, with all nine ratings for SLGN shares a Buy as of mid-2025.