Are These The Top Consumer Discretionary Stocks To Invest In Now?
After much deliberation, President Joe Biden’s $1.9 trillion COVID relief package is on its way to millions of Americans. For consumer discretionary stocks, this could mean even more attention from investors right now. Why? Well, simply put, all eligible citizens will be receiving $1,400 in discretionary cash to spend. According to President Biden, roughly 85% of U.S. households will qualify for said checks. As a result, investors would likely want to follow the money heading towards consumer discretionary companies. This would be the case with this much money potentially being put back into the economy.
On top of all that, investors have already been rotating towards the top consumer discretionary stocks amidst fears over rising bond yields in recent weeks. With the stimulus check boosts, I could see them continue their rallies moving forward. Take the Walt Disney Company (NYSE: DIS) for example. On one hand, its booming streaming service continues to grow at breakneck speeds.
On the other hand, the company is gradually opening its theme parks at limited capacities. It is no wonder then that DIS stock continues to soar to new heights. Similarly, casino company Penn National Gaming (NASDAQ: PENN) who pivoted towards online sports betting last year is another good example. PENN stock is now looking at gains of over 1,400% in the past year. Given all of this, would you consider these stocks to be top consumer discretionary stocks to watch now?
Top Consumer Discretionary Stocks To Watch
- Vail Resorts Inc. (NYSE: MTN)
- Adient PLC (NYSE: ADNT)
- L Brands Inc. (NYSE: LB)
- Funko Inc. (NASDAQ: FNKO)
Vail Resorts Inc.
Vail Resorts is a Colorado-based resort company. To summarize, the leading global mountain resort company operates out of 37 destinations across the U.S., Australia, and Canada. Investors would be watching Vail Resorts as the tourism industry continues to heat up in anticipation of post-pandemic tourism booms. So much so that MTN stock has more than doubled in value over the past year. In fact, MTN stock hit a record high during the early hours of trading last Friday. This bump does line up with its latest quarterly earnings report which might have wowed investors.
Diving right into it, Vail Resorts exceeded consensus estimates in both earnings per share and revenue forecasts. In particular, the company posted earnings of $3.62 a share on revenue of $685 million for the quarter. According to CEO Rob Katz, the company is still able to welcome guests with “no major ongoing disruptions.” right now. This is thanks to Vail Resorts working towards prioritizing the health and safety of guests.
Despite overall results being negatively impacted, total visitations across its North American destinations were only down by 5%. Despite the massive pandemic-related impacts affecting its business, Vail Resorts appears to be making a faster-than-expected recovery. Could this make MTN stock a buy now? You tell me.
Following that, we have Irish automotive component company, Adient. In brief, the company manufactures automotive seating for customers across the globe. To put things into perspective, the company operates 202 manufacturing and assembly plants worldwide. Through these facilities, it produces and delivers automotive seating for all major original equipment manufacturers (OEMs), according to Adient. More importantly, ADNT stock has more than quadrupled over the past year reaching a three-year high. This would be thanks to a 17% surge in price last Friday on account of its latest business update.
Namely, Adient entered into an agreement with its joint venture (JV) partner Yanfeng. Through this agreement, Adient will be selling its 50% stake in its Yanfeng Adient Seating (YFAS) JV for $1.5 billion in cash. At the same time, Adient will also be acquiring YFAS’s 50% share in Chongqing Yangfeng Adient Automotive Components (CQYFAS) along with a 100% equity interest in Yanfeng Adient Seating Langfang Seating Company (YFAS-LF).
Adient is looking to consolidate both China-based businesses, CQYFAS and YFAS-LF, and bolster its operations in the region. Simply put, the company will be able to independently drive its China strategy through this deal. Ideally, CEO Doug Del Grosso says that this will further position the company for future growth in the world’s largest automotive market. Should this hold true, would now be a good time to invest in ADNT stock?
L Brands Inc.
Another top consumer discretionary player making waves now would be L Brands. For the uninitiated, L Brands is the parent company of household name brands Victoria’s Secret and Bath & Body Works. Given the popularity of its two flagship brands, investors could see the company as a go-to for consumer discretionary dollars now. This would be the case as the last round of stimulus checks saw L Brands topping year-ago pre-pandemic sales figures in its latest quarter fiscal. In it, the company posted a total revenue of $4.82 billion compared to a revenue of $4.71 billion. Moreover, L Brands posted massive year-over-year surges of 548% in net income and 532% earnings per share as well. Likewise, LB stock has also been on a tear gaining over 50% year-to-date, reaching new three-year highs.
Aside from a solid quarter, the latest news fueling LB stock’s rise would be L Brands’ latest shareholder update. For starters, the company raised its profit outlook for the current quarter by over 44% on top and bottom lines. CEO Andrew Meslow cites strong quarter-to-date sales and profits as of last Friday as motivation for this move.
Additionally, the company also revealed that it will be reinstating its annual dividend, paying down debt, and buying back shares. With L Brands clearly making the most of its holiday season momentum, will you be adding LB stock to your portfolio?
Next, we will be looking at Funko. To begin with, the company is a leading pop culture consumer products company. It designs, sources, and distributes licensed pop culture collectibles across multiple categories. The most popular of which would be its Funko Pop series consisting of collectible action figures of pop culture icons. Accordingly, the toymaker would be another prime destination for consumer’s discretionary dollars this week. As such, it comes as no surprise that FNKO stock is up by over 70% year-to-date. This and the fact that Funko released its latest quarter fiscal last week would put FNKO stock in the limelight now.
In its fourth-quarter fiscal, the company posted an earnings per share of $0.24 on sales of $226.5 million. This beat analysts’ projections of an earnings per share of $0.14 on sales of $195.7 million by a fair amount. Furthermore, Funko appears confident moving forward, raising its 2021 top-line sales guidance to an increase of 30%.
In this case, the company is looking to capitalize on the popularity of Disney’s Marvel and Star Wars IPs this year. The likes of which remain highly relevant in pop culture now thanks to Disney’s streaming service. All in all, do you think FNKO stock still has room to run this year?