The consumer discretionary sector is a category of the economy comprising businesses that sell non-essential goods and services. Unlike consumer staples, which include necessities like food and healthcare, discretionary products and services are often luxury items or activities. Such as travel and entertainment. Demand for these goods tends to rise and fall with the health of the economy, making the consumer discretionary sector a bellwether for economic performance. When consumers have more disposable income, sales in this sector generally see a boost, and vice versa.
Investing in consumer discretionary stocks can be a double-edged sword. On one hand, these stocks often offer the promise of high returns during economic booms, as consumers are more willing to spend on luxuries and non-essentials. Companies in this sector can range from automakers and homebuilders to retailers and restaurants. On the other hand, they are usually the first to suffer in times of economic downturns when consumers cut back on discretionary spending. This makes these stocks more volatile compared to other sectors like utilities or healthcare, which provide essential services that are in demand regardless of economic conditions.
For investors looking to capitalize on economic growth phases, consumer discretionary stocks can be an attractive option. However, due diligence is crucial as not all companies in this sector are created equal. As with any investment, diversification within this sector or having holdings in other sectors can help mitigate risks. It’s also advisable to keep an eye on economic indicators that could signal changes in consumer behavior, as these will directly impact the performance of consumer discretionary stocks. That said, here are two popular consumer discretionary stocks to keep on your radar in the stock market today.
Consumer Discretionary Stocks To Watch Now
- Starbucks Corporation (NASDAQ: SBUX)
- The Walt Disney Company (NYSE: DIS)
Starbucks Corporation (SBUX Stock)
First up, Starbucks Corporation (SBUX) stands as an international leader in the specialty coffee industry, boasting an extensive global presence with its numerous outlets. The company has firmly established itself as a key player in the consumer discretionary market by offering a wide range of specialty coffee drinks, food options, and associated merchandise.
At the beginning of this month, Starbucks announced better-than-expected third-quarter 2023 financial results. Specifically, the company reported Q3 2023 earnings of $1.00 per share, with revenue of $9.17 billion. This is compared to Wall Street’s estimates which were earnings per share of $0.95 and revenue estimates of $9.30 billion. Moreover, revenue increased by 12.49% versus the same period, the previous year.
Over the last six months of trading action, shares of SBUX stock have pulled back by 5.40%. Meanwhile, during Monday morning’s trading session, Starbucks’s stock opened higher by 1.19% trading at $96.62 a share.
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Walt Disney Company (DIS Stock)
Second, The Walt Disney Company (DIS) is a global leader in media and entertainment, with a diverse array of business segments that include film, television, theme parks, and digital streaming platforms. The company boasts an expansive lineup of popular franchises, including Marvel, Star Wars, and Pixar, which contribute to its multiple avenues of revenue.
In August, Disney also reported a beat for its third quarter of 2023 financial results. In detail, the entertainment giant announced earnings of $1.03 per share, along with revenue of $22.33 billion for Q3 2023. For context, this is versus analysts’ consensus estimates for the quarter which were an EPS of $0.99 and revenue of $20.30 billion. As a result, revenue increased by 3.84% compared to the same period, the prior year.
Looking at the last six months of trading, shares of DIS stock have retreated by 15.13%. Moreover, during Monday morning’s trading session, Walt Disney stock opened the trading day up 1.42% at $84.54 a share.
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