Are These 4 Consumer Discretionary Stocks Set to Win in 2026?

The Consumer Products-Discretionary industry remains dynamic, characterized by evolving consumer preferences, economic conditions and continuous innovation. Easing inflationary pressures, improving supply-chain efficiency and steady employment levels are helping support consumer spending on non-essential goods. However, these tailwinds are being partially offset by still-elevated interest rates, value-conscious consumer behavior and uneven demand across income cohorts, which continue to pressure volumes and margins for several players. As a result, industry performance remains highly sensitive to macroeconomic signals, pricing discipline and the ability of companies to adapt to evolving consumer trends.

While challenges persist, companies with strong brand loyalty, pricing power and diversified channels are better positioned to navigate the headwinds. Firms that successfully integrate physical and digital platforms, deliver targeted promotions and maintain efficient supply chains are more likely to capture consumer demand even amid cautious spending. SharkNinja, Inc. SN, Reynolds Consumer Products Inc. REYN, Central Garden & Pet Company CENT and The RealReal, Inc. REAL stand out as strong contenders in this evolving marketplace.

About the Industry

The Consumer Products-Discretionary industry has a direct correlation with the economy, making it cyclical. Discretionary products command high prices, with middle-to-higher-income groups being the targeted customers. The industry comprises companies that offer product categories, including fashion, jewelry and watches, and other home and art products. Quite a few players develop, manufacture, market and sell over-the-counter health and personal care products. Some even manufacture and distribute party goods. Some companies design, source and distribute licensed pop culture products, too. Some industry participants also produce and distribute various products for the lawn and garden and pet supplies markets. Companies sell products to specialty retailers, mass-market retailers and e-commerce sites. 

3 Key Trends to Watch in the Industry

Shift Toward Value and Selective Spending: Consumers remain increasingly value-conscious amid elevated interest rates and economic uncertainty, leading to more selective discretionary spending. While demand for experiences, travel and lifestyle-oriented products remains relatively resilient, purchases of big-ticket and non-essential goods continue to face pressure. This trend is driving higher promotional activity, private-label penetration and a greater focus on affordability, weighing on margins for companies unable to manage pricing and costs effectively. However, brands that emphasize quality, innovation, sustainability, and personalization are better positioned to maintain pricing power and customer loyalty.

Margins, an Area to Watch: The industry remains highly fragmented, with companies competing to capture market share through price, product offerings and speed to market. To stay ahead, many players have been investing heavily in strengthening their digital ecosystems, which can provide a competitive edge but also entail substantial costs. Rising marketing, advertising and other operational expenses continue to put pressure on margins, while recent product cost inflation adds another layer of challenge. Despite these headwinds, companies are pursuing initiatives to mitigate cost pressures, including streamlining operations, optimizing supply chains and implementing more effective pricing strategies.

Brand Enhancement, Capital Discipline: Industry participants have been focusing on deepening consumer engagement, developing innovative products, and enhancing digital and data analytics capabilities. Initiatives such as launching new styles, offering customization, creating unique packaging, improving point-of-sale experiences, leveraging automation, and providing high-end customer service help attract and retain consumers. Efforts to strengthen brand portfolios through marketing campaigns, strategic acquisitions, product innovations and alliances continue to support growth in the sector. At the same time, companies are taking steps to fortify their financial position by efficiently managing inventory, optimizing capital expenditures and improving overall operational efficiency.

Zacks Industry Rank Indicates Bleak Prospects

The Zacks Consumer Products-Discretionary industry is a group within the broader Consumer Discretionary sector. The industry currently carries a Zacks Industry Rank #183, which places it in the bottom 25% of more than 250 Zacks industries.

The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates drab near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. 

The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of the negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are losing confidence in this group’s earnings growth potential. Over the past year, the industry’s earnings estimate has declined 21.6%.

Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.

Industry Versus Broader Market

The Zacks Consumer Products-Discretionary industry has underperformed the broader Zacks Consumer Discretionary sector and the Zacks S&P 500 composite over the past year.

The industry has declined 4.1% over this period against the S&P 500’s rise of 13.6%. Meanwhile, the broader sector has fallen 3.8%.

One-Year Price Performance

Industry's Current Valuation

Based on the forward 12-month price-to-sales (P/S), which is commonly used for valuing consumer discretionary stocks, the industry is currently trading at 2.65X compared with the S&P 500’s 5.53X and the sector’s 2.39X.

Over the last three years, the industry has traded as high as 3.24X and as low as 2.43X, with the median being at 2.77X, as the chart below shows.

Price-to-Sales Ratio (Past 3 Years)

4 Stocks to Watch

Reynolds Consumer: Reynolds Consumer Products demonstrates a robust bullish case, driven by its dual leadership in both premium brand equity and high-value store brand segments, allowing it to capture growth across a widening consumer "barbell". The company’s unique position as a vertically integrated U.S. manufacturer provides a significant competitive moat, insulating operations from global trade volatility while enhancing supply-chain agility. Strategic investments in revenue growth management and operational automation are already yielding efficiency gains and stabilizing margins despite inflationary pressures. Furthermore, a strong pipeline of category-expanding innovations, particularly in the fast-growing parchment and scented waste bag segments, continues to drive market share gains over competitors. These factors, combined with a disciplined approach to debt reduction and capital allocation, position the company for sustained earnings growth and long-term value creation.

This leading provider of household essentials designed to simplify everyday life, offering trusted solutions for cooking, cleanup and food storage, delivered a trailing four-quarter earnings surprise of 2.6%, on average. The Zacks Consensus Estimate for Reynolds Consumer’s current financial-year sales suggests growth of 0.2% from the year-ago period. Shares of this Zacks Rank #2 (Buy) company have fallen 12.1% in the past year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Price and Consensus: REYN

Central Garden & Pet Company: Central Garden & Pet boasts a diversified portfolio of market-leading brands and a resilient business model. The company is successfully executing its "Cost and Simplicity" program, which has streamlined operations and strengthened its logistics network. Strategic investments in digital technology, AI readiness and product innovation, such as the Pennington Feeding Frenzy and Farnam Endure lines, are effectively capturing market share and fueling organic growth across e-commerce and retail channels. Furthermore, a solid balance sheet and strong cash generation provide significant flexibility for margin-accretive mergers and acquisitions and continued opportunistic capital returns to shareholders. With its robust Central to Home strategy and deepening retail partnerships, the company is exceptionally well-positioned to navigate macroeconomic shifts.

The Zacks Consensus Estimate for Central Garden & Pet Company’s current financial-year sales and EPS suggests growth of 0.3% and 0.7% from the year-ago period. CENT delivered a trailing four-quarter earnings surprise of 220.5%, on average. Shares of this Zacks Rank #2 company have declined 12.3% in the past year.

Price and Consensus: CENT

SharkNinja: SharkNinja is strengthening its position as a differentiated consumer products leader, driven by a powerful portfolio spanning cleaning, cooking, beauty, and home environment under the trusted Shark and Ninja brands. Management highlighted consistent market share gains across categories and geographies, supported by consumer-centric innovation that is expanding both into new adjacencies and within core franchises. The company’s disciplined execution, strong retailer relationships, and expanding direct-to-consumer and international footprint reinforce its competitive moat and brand loyalty. Strategic investments in product development, marketing, and global infrastructure are translating into resilient performance despite a challenging macro backdrop.

This global product design and technology company, with a diversified portfolio of lifestyle solutions, has a trailing four-quarter earnings surprise of 17.3%, on average. The Zacks Consensus Estimate for SharkNinja’s current financial-year sales and EPS suggests growth of 15.3% and 17.4%, respectively, from the year-ago period. Shares of this Zacks Rank #3 (Hold) company have risen 10.5% in the past year.

Price and Consensus: SN

The RealReal: The RealReal has established itself as the leader in the luxury resale market, leveraging a trusted brand and a capital-light consignment model to drive strong financial momentum. By focusing on high-value supply and higher-margin categories, the company has created a scalable path to consistent profitability and positive cash flow. Innovation remains a key differentiator, with proprietary AI-driven tools streamlining operations. The platform’s appeal to both Gen Z and Millennial shoppers fuels a strong flywheel, helping it capture a growing share of the circular economy. 

The Zacks Consensus Estimate for REAL’s current financial-year sales and EPS suggests growth of 14.7% and 88.7%, respectively, from the year-ago period. Shares of this Zacks Rank #3 company have zoomed 77.2% in the past year.

Price and Consensus: REAL

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SharkNinja, Inc. (SN): Free Stock Analysis Report
 
Central Garden & Pet Company (CENT): Free Stock Analysis Report
 
The RealReal, Inc. (REAL): Free Stock Analysis Report
 
Reynolds Consumer Products Inc. (REYN): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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