Most consumer discretionary businesses succeed or fail based on the broader economy. Lately, it seems like demand trends have worked in their favor as the industry has returned 7.4% over the past six months, similar to the S&P 500.
Regardless of these results, investors should tread carefully as many companies in this space are unpredictable because they lack recurring revenue business models. Keeping that in mind, here are two resilient consumer stocks at the top of our wish list and one best left ignored.
One Consumer Discretionary Stock to Sell:
Sabre (SABR)
Market Cap: $682.5 million
Originally a division of American Airlines, Sabre (NASDAQ: SABR) is a technology provider for the global travel and tourism industry.
Why Does SABR Worry Us?
- Performance surrounding its central reservation system transactions has lagged its peers
- Negative free cash flow raises questions about the return timeline for its investments
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Sabre is trading at $1.74 per share, or 5.4x forward P/E. To fully understand why you should be careful with SABR, check out our full research report (it’s free).
Two Consumer Discretionary Stocks to Watch:
Light & Wonder (LNW)
Market Cap: $7.87 billion
With names as crazy as Ultimate Fire Link Power 4 for its products, Light & Wonder (NASDAQ: LNW) is a gaming company supplying the casino industry with slot machines, table games, and digital games.
Why Are We Fans of LNW?
- Disciplined cost controls and effective management resulted in a strong two-year operating margin of 21.4%
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Rising returns on capital show the company is starting to reap the benefits of its past investments
Light & Wonder’s stock price of $94.39 implies a valuation ratio of 14x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Grand Canyon Education (LOPE)
Market Cap: $5.63 billion
Founded in 1949, Grand Canyon Education (NASDAQ: LOPE) is an educational services provider known for its operation at Grand Canyon University.
Why Do We Like LOPE?
- Healthy operating margin of 26.8% shows it’s a well-run company with efficient processes
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures, and its returns are climbing as it finds even more attractive growth opportunities
- Rising returns on capital show management is finding more attractive investment opportunities
At $202.51 per share, Grand Canyon Education trades at 22.1x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
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