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We’re Bullish on Consumer Discretionary Stocks

Hassan Maishera - November 27, 2019

Consumer Discretionary Stocks

Consumer discretionary stocks represent companies that make and sell non-essential items, including both goods and services. These companies sell things items like 4k TVs, automobiles, and video games; basically anything that’s not part of the average household’s monthly bills. On the services front, consumer discretionary includes restaurants, casinos, and more.

This sector does not include things like grocery stores and utilities. Most households need to pay for these types of items regardless of their economic circumstances, so they’re considered essential goods and services. These types of companies fall into the consumer staples sector.

Consumer discretionary stocks usually fare better during an economic boom, so the current environment is very bullish for this sector. The U.S. consumer is extremely strong, so consumer discretionary stocks could be the big winner this holiday season.

Best Consumer Discretionary Stocks

Consumer discretionary stocks are running hot, but these companies stand out as some of the top picks.

Target Corp. (TGT)

Target Corp sells a variety of products via its Target and SuperTarget stores. The company’s stock has been phenomenal this year, rising by nearly 100% since the start of the year. This is a bit of a hybrid stock because Target sells groceries, which are consumer staples, but the company still generates a huge portion of its revenues from discretionary spending on things like electronics.

Last week, the company raised its full-year outlook amid strong sales and profitability. The third-quarter comparable sales for Target Corp was up by 4.5%, which is 1% higher than what analysts had expected. Their annual profit would be between $6.25 and $6.45 a share, the company announced.

consumer discretionary target
Target is one of the best stocks in the retail sector this year, Share prices have nearly doubled since the start of 2019.

Target’s focus on e-commerce, such as same-day delivery, is paying off big. It also recently completed large-scale renovations across hundreds of stores, and the new stores are attracting more customer traffic. Target is shaping up to be a fierce competitor for Amazon, Walmart, and other big-name retailers.

Chipotle Mexican Grill (CMG)

This fast-casual restaurant operates in the US and abroad, including locations in Canada, the UK, France, and Germany. Food safety concerns hurt Chipotle’s stock in the past, but it’s been one of the best restaurant stocks for the past few years.

Chipotle is one of the leading consumer discretionary stocks this year. It is already up by 84% year-to-date, with more upward potential. However, Chipotle isn’t slowing down. The company recently announced that customers could order Chipotle on Alexa, either for delivery or pickup. It also began offering carne asada in its restaurants this year, and the new product received a warm reception from customers.

Similarly, analysts have been bullish of Chipotle’s stock ahead of 2020. Analysts at Cowen, headed by Andrew Charles, recently upgraded the stock to ‘OUTPERFORM’ as they see it getting better by next year. Chipotle’s recent track record of strong execution could see the company’s stock perform excellently through 2020. Analysts believe that digital strategy would be vital to the company’s growth over the coming years.

Starbucks Corp (SBUX)

American coffee company, Starbucks, is another discretionary stock that could perform well in the coming months. Starbucks ‘ stock is up by over 37% since the start of 2019 but could go further in the future.

consumer discretionary starbucks
Starbucks’ expansion into China is paying off big for the company. It’s capturing a huge portion of the Chinese coffee market.

In its previous quarterly earnings report, Starbucks posted a sales increase in China and the US. The company is investing heavily in new beverages and digital ordering, and these investments could begin to pay dividends next year.

More Consumer Discretionary Stocks to Buy Now

Consumer discretionary stocks tend to perform best during a bull market. Subscribe to the Dork to stay updated on the latest news for consumer discretionary stocks and much more. Plus, follow The Stock Dork on Twitter and Facebook for all of the latest stock market news. Make sure you never miss another opportunity, sign up for mobile Dork Alerts to get Dork Alerts delivered to your phone.

Hassan Maishera is a cryptocurrency expert and a Stock Dork freelance contibutor.

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