3 Top Consumer Discretionary Stocks To Watch This Week
Consumer discretionary stocks were one of the sectors that were heavily affected by the global COVID-19 Pandemic in 2020. When we buy something, it comes down to two things, wants and needs. Well, the discretionary consumer is referencing the “wants”. In fact, the foundation of a “discretionary” purchase ultimately means you’re making the choice to spend money. Now, let’s not get “consumer staples stocks” and “consumer discretionary stocks” mixed up.
Top consumer staples stocks gained a lot of investor interest in 2020 and were some of the most reliable investments to make in the stock market during the pandemic. We can assume this is because of people spending more time at home, things such as grocery shopping or shopping for essential items were a sure thing. For example, we saw top consumer stocks like Target (NYSE: TGT) and Home Depot (NYSE: HD) share prices increase by over 63% and 17%, respectively.
Fast forward to this year, the COVID-19 vaccine is providing newfound optimism among investors looking for the best consumer discretionary stocks to watch right now. Following months of declines, the U.S. consumer confidence index advanced moderately in January. The index gives us a pulse on how the overall economy is performing. Even though we’re still under pre-pandemic levels, this advance in January is a positive sign for consumer confidence for the broader market. Along with that, we have the U.S government working on another round of stimulus checks. This could spark an increase in discretionary spending. With all that being said, here are some of the top consumer discretionary stocks to watch this week.
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- Nike Inc. (NYSE: NKE)
- Lululemon Athletica Inc. (NASDAQ: LULU)
- The Walt Disney Company (NYSE: DIS)
First up on the list is top consumer stock Nike, Inc. or NKE. Nike is the largest athletic footwear and apparel brand in the world. The Oregon-based company was founded in 1964. NKE stock is currently up by over 130% since March lows. The company’s most recent quarterly results also provide a positive outlook on the future. NKE reported it’s second-quarter fiscal report back in December 2020. The company reported total revenue of $11.2 billion for the quarter. With an 84% year-over-year increase in its digital sales, this is definitely something that would make investors happy to see.
CFO Matt Friend states, “With healthy inventory positions across all geographies, our return to growth is a testament to our digital strength, as well as our disciplined marketplace and financial management.” It’s obvious, Nike is a company that has adapted well to the new normal.
Furthermore, on the same earnings call, NKE announced its plans to open 30 stores this year. Regardless of its impressive performance over the last two quarters, it doesn’t look like NKE stock is slowing down. As of Friday’s close NKE stock is trading at $145.11 a share. Will you add NKE stock to your watchlist this week?
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Next up on the list is top retail company Lululemon Athletica or referred to as LULU. LULU stock has been of the best performing consumer discretionary stocks in the stock market in the last year. Lululemon is a retailer that focuses on athletic apparel products and accessories. The company has done a great job building brand loyalty, with over 500 stores in the U.S and internationally. This has resulted in an increase of over 140% since March lows for LULU stock. Shares closed Friday’s trading session at $334.08 a share. Let’s take a look at some of the company’s recent announcements.
As investors wait anxiously for LULU to report its fourth-quarter earnings, here’s what we know. InJanuary, LULU announced the company expects revenue and earnings to be at the “high end” of its previous estimates. Chief Executive Officer of LULU Calvin McDonald, stated, “We’re pleased with the momentum over the holiday period as our investments in lululemon and MIRROR allowed us to connect with guests both physically and digitally. We remain confident about our opportunities in 2021 and committed to our Power of Three growth plan.”
The company last reported earnings in December announcing strong third-quarter results. LULU reported that net revenue increased 22% to $1.1 billion, with a 19% increase in North America and a 45% gain internationally. Furthermore, the company also reported that its direct-to-consumer net revenue spiked by an impressive 94% for the third quarter. This is a good sign as we continue to utilize e-commerce as the top choice for discretionary buying right now. The question becomes, what will LULU’s stock fourth-quarter earnings report look like? Well, only time will tell, but if it’s anything like the previous quarter, do you think you should consider adding LULU stock to your list of stocks to watch on Monday?
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Third, we have entertainment giant The Walt Disney Company or DIS. I think it’s fair to say that DIS stock has been of the best stories on Wall Street this past year. After the company got rocked by the COVID-19 pandemic forcing the company to shut down its theme parks and movie production, DIS stock has made a strong recovery since March lows. Shares of DIS stock have increased over 111% since March, closing Friday’s session at $181.16 a share. A lot of this recovery can be attributed to the company’s management deciding to put more emphasis on its streaming service, Disney+.
In fact, in December the company announced it has passed 137 million paid subscriptions for its direct-to-consumer services, which consist of Disney+, Hulu, and ESPN+. “The tremendous success we’ve achieved across our unique portfolio of streaming services, with more than 137 million subscriptions worldwide, has bolstered our confidence in our acceleration toward a DTC-first business model,” commented Disney CEO Bob Chapek.
Next, Disney is set to report its fiscal first-quarter 2021 financial results this Thursday, February 11th, 2021 at 4:30 pm E.T. Amid the COVID-19 vaccine roll-out, will this impact DIS’s subscriber growth this quarter? Your guess is as good as mine. But we will be watching DIS stock closely this week as investors wait patiently for these quarter results.