Most consumer discretionary businesses succeed or fail based on the broader economy. Over the past six months, it seems like demand trends are working against their favor as the industry
has tumbled by 8.2%. This drawdown was worse than the S&P 500’s 2.9% loss.
A cautious approach is imperative when dabbling in these companies as many also lack recurring revenue characteristics and ride short-term fads. On that note, here are three consumer stocks we’re steering clear of.
The New York Times (NYT)
Market Cap: $8.52 billion
Founded in 1851, The New York Times (NYSE:NYT) is an American media organization known for its influential newspaper and expansive digital journalism platforms.
Why Should You Sell NYT?
Demand for its offerings was relatively low as its number of subscribers has underwhelmed
Projected sales growth of 6% for the next 12 months suggests sluggish demand
Eroding returns on capital suggest its historical profit centers are aging
Formed in 1984 as Bell Atlantic after the breakup of Bell System into seven companies, Verizon (NYSE:VZ) is a telecom giant providing a range of communications and internet services.
Why Is VZ Risky?
Customer additions have disappointed over the past two years, indicating the company’s value proposition may not be resonating
Free cash flow margin is forecasted to shrink by 2.2 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free.
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