3 Consumer Stocks Skating on Thin Ice

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 13%. This performance was significantly worse than the S&P 500’s 1.8% fall.

Investors should tread carefully as many companies in this space are also unpredictable because they lack recurring revenue business models. Taking that into account, here are three consumer stocks we’re swiping left on.

G-III (GIII)

Market Cap: $1.23 billion

Founded as a small leather goods business, G-III (NASDAQ:GIII) is a fashion and apparel conglomerate with a diverse portfolio of brands.

Why Do We Think GIII Will Underperform?

1. Products and services fail to spark excitement with consumers, as seen in its flat sales over the last two years
2. Estimated sales decline of 2% for the next 12 months implies an even more challenging demand environment
3. ROIC of 7.8% reflects management’s challenges in identifying attractive investment opportunities

G-III’s stock price of $28.40 implies a valuation ratio of 7.1x forward P/E. Read our free research report to see why you should think twice about including GIII in your portfolio.

Harley-Davidson (HOG)

Market Cap: $2.98 billion

Founded in 1903, Harley-Davidson (NYSE:HOG) is an American motorcycle manufacturer known for its heavyweight motorcycles designed for cruising on highways.

Why Should You Sell HOG?

1. Number of motorcycles sold has disappointed over the past two years, indicating weak demand for its offerings
2. Diminishing returns on capital suggest its earlier profit pools are drying up
3. 13× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly

Harley-Davidson is trading at $24.53 per share, or 7.4x forward P/E. Dive into our free research report to see why there are better opportunities than HOG.

Sphere Entertainment (SPHR)

Market Cap: $1.33 billion

Famous for its viral Las Vegas Sphere venue, Sphere Entertainment (NYSE:SPHR) hosts live entertainment events and distributes content across various media platforms.

Why Do We Steer Clear of SPHR?

1. Sales trends were unexciting over the last five years as its 2.4% annual growth was below the typical consumer discretionary company
2. Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
3. Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders

At $37 per share, Sphere Entertainment trades at 7.3x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why SPHR doesn’t pass our bar.

Stocks We Like More

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out 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 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.