3 Consumer Stocks That Concern Us

Consumer discretionary businesses are levered to the highs and lows of economic cycles. Thankfully for the industry, all signs are pointing up as discretionary stocks have gained 19.3% over the past six months, beating the S&P 500’s 15.3% return.

Nevertheless, this stability can be deceiving as many companies in this space lack recurring revenue characteristics and ride short-term fads. With that said, here are three consumer stocks best left ignored.

PlayStudios (MYPS)

Market Cap: $81.26 million

Founded by a team of former gaming industry executives, PlayStudios (NASDAQ:MYPS) offers free-to-play digital casino games.

Why Do We Avoid MYPS?

1. Sluggish trends in its daily active users suggest customers aren’t adopting its solutions as quickly as the company hoped
2. Historically negative EPS is a worrisome sign for conservative investors and obscures its long-term earnings potential
3. Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital

At $0.65 per share, PlayStudios trades at 2.5x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why MYPS doesn’t pass our bar.

WideOpenWest (WOW)

Market Cap: $427.8 million

Initially started in Denver as a cable television provider, WideOpenWest (NYSE:WOW) provides high-speed internet, cable, and telephone services to the Midwest and Southeast regions of the U.S.

Why Do We Pass on WOW?

1. Demand for its offerings was relatively low as its number of subscribers has underwhelmed
2. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
3. Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution

WideOpenWest is trading at $5.16 per share, or 1.7x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including WOW in your portfolio.

Nike (NKE)

Market Cap: $97.1 billion

Originally selling Japanese Onitsuka Tiger sneakers as Blue Ribbon Sports, Nike (NYSE:NKE) is a global titan in athletic footwear, apparel, equipment, and accessories.

Why Do We Think NKE Will Underperform?

1. Weak constant currency growth over the past two years indicates challenges in maintaining its market share
2. Free cash flow margin is forecasted to shrink by 2.9 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
3. Diminishing returns on capital suggest its earlier profit pools are drying up

Nike’s stock price of $65.70 implies a valuation ratio of 34.8x forward P/E. To fully understand why you should be careful with NKE, check out our full research report (it’s free for active Edge members).

High-Quality Stocks for All Market Conditions

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

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