Are these the best consumer discretionary stocks to invest in the second half of 2022?
Consumer discretionary stocks are those that represent companies on the stock market that sell non-essential goods and services. These can include things like clothing, electronics, media, and automobiles. Consumer discretionary stocks are often considered more sensitive to economic fluctuations than other types of stocks. Indeed, when consumers are confident in the economy, they are more likely to spend money on discretionary items.
Conversely, when the economy is weak, consumers may reduce spending, leading to lower inventories of consumer discretionary goods. Therefore, these stocks may be more volatile than other types of stocks. For example, let’s look at consumer discretionary companies like Nike, Inc. (NYSE: NKE) and Etsy Inc. (NASDAQ: ETSY). NKE shares are down more than 28% since the start of the year. Although in the last month of trading, NKE stock has rebounded over 12%. Meanwhile, ETSY shares have fallen more than 44% since the start of the year, although the stock has recovered more than 38% in the last month of trading activity.
In light of this, consumer discretionary stocks may also offer the potential for higher returns in a strong economy. For these reasons, consumer discretionary stocks can be an attractive option for investors willing to accept more risk. If you like consumer discretionary stocks, here are three for your watch list this month.
Consumer Discretionary Stocks to Watch Today
The Walt Disney Company (DIS action)
Let’s first look at a company that needs no introduction, Walt Disney Company (SAY). The Walt Disney Company is one of the largest entertainment and media conglomerates in the world. In detail, the company operates in four business segments; parks and resorts, media networks, studio entertainment, consumer products and interactive media. The company has a track record of strong financial performance and its stock price has steadily increased over the past few years.
Earlier this month, The Walt Disney Company announced stronger than expected third quarter results. In the report, Disney posted earnings of $1.09 per share on revenue of $21.5 billion. Analyst consensus estimates for the quarter were earnings of $0.94 per share on revenue of $20.1 billion. Additionally, the company recorded a 26.3% increase in revenue over the same period of the previous year.
Bob Chapek, CEO of Disney, commented in his letter to shareholders:We had an excellent quarter, with our world-class creative and commercial teams driving outstanding performances across our national theme parks, strong live sports viewership growth, and significant subscriber growth to our entertainment services. streaming. With 14.4 million Disney+ subscribers added during the third fiscal quarter, we now have 221 million total subscriptions across our streaming offerings,“As of Wednesday, shares of DIS closed the trading day at $122.81 per share. Do you think now is the right time to add DIS stock to your watchlist?
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Netflix (NFLX stock)
Next, let’s dive into the streaming giant netflix (NFLX). To begin with, Netflix Inc. is a streaming entertainment company. Netflix’s core business is a subscription streaming service offering online streaming from a library of movies and TV series, including those produced in-house. Netflix is headquartered in Los Gatos, California. For an idea of scale, the company currently has over 200 million paid memberships in 190 countries around the world. Netflix subscribers enjoy TV series, documentaries, feature films and mobile games in a wide range of genres and languages. In July, the streaming giant announced a beat for its second quarter 2022 financial results.
Specifically, Netflix reported earnings per share of $3.20, on sales of $7.97 billion in the second quarter. That’s compared to consensus Wall Street earnings estimates of $2.95 per share, on sales of $8.03 billion. These figures reflect an 8% increase in revenue year over year. Additionally, sales were also up 9% for the quarter. Meanwhile, Netflix posted a loss of 970,000 subscribers for the second quarter. This came in below expectations of a loss of 2 million subscribers for this quarter. The company said this was due to increased competition in the market and price increases.
Netflix co-CEO Reed Hastings said in his press release to shareholders: “The second quarter was better than expected in terms of membership growth and exchange rates were worse than expected (stronger US dollar), resulting in revenue growth of 9% (13% in constant currency) . Our challenge and opportunity is to accelerate our revenue and membership growth by continuing to improve our product, content and marketing as we have done for the past 25 years, and to better monetize our broad audience. We are in a strong position given our revenue of more than $30 billion, our operating income of $6 billion last year, our growing free cash flow and our balance sheet solid.“Since that earnings release, NFLX shares have rebounded more than 26% in the past month of trading. On Wednesday, NFLX stock closed at $241.15 per share. With that, do you think NFLX is a good buy right now?
Lululemon Athletica (LULU Stock)
Then we will discuss Lululemon Athletica (LULU). For the uninitiated, Lululemon Athletica is a Canadian sportswear company. Lululemon Athletica designs, manufactures and retails athletic apparel, footwear and accessories for men, women and children. The Company’s products are sold through its stores, e-commerce platforms and third-party retailers. For an idea of scale, Lululemon Athletica has over 500 stores in North America, Europe, Asia, Australia and New Zealand.
Last month, LULU announced that it would increase its international presence and launch stores in Spain. Specifically, the company is expected to open these new stores in September. lululemon will open its first Spanish outlets in Madrid, Barcelona, Calle Serrano and Paseo de Gracia respectively. André Maestrini, Executive Vice President, International, said: “We look forward to meeting Spanish customers, through our website and when we open our first retail stores in Madrid and Barcelona. Our model’s strength in product innovation, customer experience, community and culture provides a unique advantage as we introduce lululemon to our new market..”
With that, LULU stock has rebounded more than 15% in the past month, closing Wednesday’s trading day at $329.80 per share. That being the case, are LULU stocks a good addition to your portfolio now?
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