Consumer discretionary is a term for the sector of the economy that consists of businesses that sell non-essential goods and services. In simple terms, these are things that people buy when they have extra money to spend, like going out to eat, buying a new car, or traveling.
Companies in this sector are greatly influenced by the overall state of the economy. When the economy is doing well, people tend to have more money to spend on these discretionary items, which can lead to increased profits for these companies. Conversely, during an economic downturn, spending on these goods and services usually decreases.
Consumer discretionary stocks can be quite interesting for investors. Since these companies can do exceptionally well during periods of economic prosperity, they can provide substantial returns. But they also carry a higher risk as their performance is closely tied to economic cycles. If you’re a risk-tolerant investor betting on a strong economy, consumer discretionary stocks might be an attractive option. Moreover, let’s now look at three well-known consumer discretionary stocks to watch in the stock market now.
Consumer Discretionary Stocks To Buy [Or Avoid] Now
Amazon.com (AMZN Stock)
Amazon (AMZN) is an American multinational company that focuses on e-commerce, cloud computing, digital streaming, and artificial intelligence. It’s the world’s largest online marketplace and a prominent player in the consumer discretionary sector due to the wide variety of products it sells, from books and electronics to clothing and food.
On May 17, 2023, Amazon expanded its Echo lineup with four new products: the Echo Pop, Echo Show 5, Echo Show 5 Kids, and Echo Buds, as Alexa-enabled device sales topped half a billion. Echo Pop is a compact smart speaker, Echo Show 5 is an upgraded device with a screen, and Echo Show 5 Kids is a kid-friendly version of the Echo Show 5. The Echo Buds are wireless earbuds providing hands-free Alexa access. Simultaneously, Amazon broadened the Echo Auto’s availability to eight more countries.
Over the past six months, shares of Amazon stock have trended higher up 43.13%. Meanwhile, as of Tuesday’s closing bell, Amazon stock closed the day at $126.61 a share.
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Nike Inc. (NKE Stock)
Next, Nike Inc. (NKE) is a global leader in the design, development, and marketing of athletic apparel and equipment. The company’s innovative products and strong brand make it a top choice for consumers and investors in the consumer discretionary sector. Nike’s performance is often tied to the health of the global economy and consumer spending trends.
At the beginning of this month, Nike, Inc. (NKE) announced that it will release its financial results for the fourth quarter of fiscal 2023 on Thursday, June 29, 2023, after the regular stock market trading hours. The company also plans to hold a conference call led by its management at 2:00 p.m. PT on the same day to discuss these results.
Looking at the last six months, Nike’s stock is trading modestly lower by 1.98%. Though, to finish off Tuesday’s trading day, shares of NKE stock closed up 0.94% at $106.19 per share.
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Home Depot (HD Stock)
Home Depot Inc. (HD) is the largest home improvement retailer in the United States, supplying tools, construction products, and services. Their sales often rise when the economy is strong and homeowners are investing in their properties.
Just last month, The Home Depot announced that its board of directors has approved a cash dividend of $2.09 per share for the first quarter. The dividend will be distributed on June 15, 2023. This marks the 145th straight quarter that the company has distributed a cash dividend.
Meanwhile, over the last six months of shares of HD stock have fallen by 7.54%. Though, Home Depot stock closed Tuesday’s trading session up 0.99% at $296.00 per share.