3 Consumer Discretionary Stocks That Could Be Worth Watching in 2021
When it comes to consumer discretionary stocks in the stock market today, investors have plenty of info to digest. Namely, the consumer discretionary market continues to perform exceptionally well. Throughout the current earnings season, this is evident from retail giants like Nike (NYSE: NKE) to video streaming names like Fubo (NYSE: FUBO).
For starters, demand for Nike’s sports apparel offerings remains at a high. In its latest fiscal quarter, the company raked in total revenue of $12.34 billion, marking a 95% year-over-year surge. On top of that, Nike also saw both its net income and earnings per share skyrocket by over 284% year-over-year. Elsewhere, video streaming giant Fubo posted record figures in its second-quarter earnings report last month. In it, the company saw its total revenue and ad revenue increase by 196% and 281% year-over-year respectively. Not to mention, consumer discretionaries like Fubo continue to bolster their portfolios as well. As of yesterday, the company is now working with the New York Jets via a multi-year partnership. In detail, the Fubo Sportsbook is now an Official Sports Betting Partner for the Jets.
Overall, these would be several instances of the booming consumer discretionary industry today. Even with Delta variant concerns hampering the broader stock market, demand for consumer discretionary services persists. Likewise, I can understand if investors remain keen on this part of the stock market now. In fact, even meme stock titan GameStop (NYSE: GME) continues to grow amid the current pandemic. Yesterday, the company posted narrower losses and rising sales in its second fiscal quarter report. After considering all of this, could one of these top consumer discretionary stocks be worth investing in now?
Best Consumer Discretionary Stocks To Watch Today
- RH (NYSE: RH)
- Lululemon Athletica Inc. (NASDAQ: LULU)
- Sea Limited (NYSE: SE)
RH
To begin with, we will be taking a look at RH, also known as Restoration Hardware. In brief, RH is a California-based retailer that specializes in providing home furnishings to consumers. The company sells its merchandise via a network of retail stores, catalogs, and e-commerce services. With the coronavirus seemingly returning in full force, I could see general home improvement trends continue to grow. Similarly, RH stock is currently looking at gains of over 50% year-to-date. Given its current momentum, should investors be keeping an eye on the company’s shares?
If anything, RH stock would be in focus today as it reported record second-quarter figures after yesterday’s closing bell. In it the company saw a total revenue of $989 million for the quarter, marking a sizable 39% year-over-year jump. Additionally, RH also posted massive year-over-year increases of 130% in net income and 91% in earnings per share. As a result of all this, the company is raising its fiscal 2021 outlook. RH is now expecting revenue growth of 33% at the top line versus its prior outlook of 30%.
On the operational front, the company also provided a positive update regarding the long-term viability of its business. In its shareholder letter, RH said, “We believe the data and current trends support the argument of a more long-term and sustainable step-change in consumer spending on the home. An important point to consider when analyzing the strong demand in the housing market is the migration of consumers to larger suburban and second homes. This trend is resulting in substantial square footage growth that is driving increased furniture and furnishings demand.” Adding to that, RH is reportedly in the midst of the “largest new product cycle” in its history. Would all this make RH stock a good investment for you?
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Lululemon Athletica Inc.
Another player to consider among consumer discretionaries this week would be Lululemon Athletica. As the name suggests, Lululemon is a multinational athletic apparel retailer. The Canadian company remains a go-to for consumers looking to update their activewear wardrobes today. Meanwhile, LULU stock appears to be a go-to for investors given its gains of over 120% since its pandemic era low. In fact, the company’s shares skyrocketed by over 13% in pre-market trading today.
For the most part, this could be on account of its latest fiscal quarter report, posted yesterday. Lululemon reported an earnings per share of $1.65 on revenue of $1.45 billion for the quarter. Notably, this is well above consensus estimates of $1.19 and $1.34 billion respectively. For some perspective, the company is now looking at year-over-year gains of 150% in earnings per share and 60% in total revenue. Based on Lululemon’s current estimates, the company is now on track to hit its 2023 revenue targets by the end of 2021.
Safe to say, the current momentum in Lululemon’s overall operations would be turning head in the stock market now. According to CEO Calvin McDonald, Lululemon is already considering new financial targets, to be announced after the holiday season. CFO Meghan Frank cites a strong response to Lululemon’s offerings, improved store productivity, and sustained e-commerce strength as key growth factors for the quarter. Accordingly, the company is raising its revenue outlook for both the third-quarter and fiscal year. All things considered, will you be adding LULU stock to your watchlist?
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Sea Limited
Following that, we have Sea Limited. For the uninitiated, Sea boasts massive operations both in the online gaming and e-commerce spaces today. Firstly, the company’s Garena gaming arm is the developer behind one of the world’s most downloaded mobile games, Free Fire. Secondly, the company’s Shopee digital retail service continues to thrive as well. Given that both of Sea’s flagship businesses remain relevant throughout the current pandemic, investors could be eyeing SE stock.
Evidently, SE stock is currently up by over 60% year-to-date. Thanks to its latest plays, I could see this trend continue. Just yesterday, the company revealed plans to raise $6.3 billion via 2021’s largest equity deal. In essence, Sea is offering 11 million shares worth about $3.8 billion and issuing $2.5 billion of equity-linked debt. Ideally, this move would serve to further finance the company’s current expansion plans.
This seems to be the case as reports earlier this week suggested that the company is looking to launch its Shopee service in the Polish market. According to Reuters, Sea is currently recruiting sellers in the region as well. Now, should this be the case, it would indicate Sea’s first expansion into the European e-commerce market. Simultaneously, reports also said that Shopee is preparing to launch in India. As the company appears to be kicking into high gear, will you be watching SE stock?
