The Top Consumer Discretionary Stocks

PUBLISHED Sep 23, 2022, 1:53:54 AM        SHARE

imgStaff Writer

How we Determine the top Consumer Discretionary Stocks?

The stock list above wasn't hurriedly made by an intern to meet the end of month deadline. StockBossUp's top stock lists are generated from the analysis of our thousands of users to discover which users are our gurus. Our top consumer discretionary stocks are chosen from these gurus.

But what is a guru when it comes to stocks? Our algorithm check a user's performance, volatility, and diversification to make sure they can perform at different dimensions of investing.

Analysis matters, and our algorithms look for articles focused on long term investing instead of hoping for short-term gains. Stock analysis with a strong focus on long-term investing trend well in our top stock lists.

We are committed to our users, our new visitors, and our future visitors to always trend the top analysis that may help our users perform better in the stock market. We are dedicated to wealth creation at scale and believe we can achieve this through trusted investment knowledge.

What are Consumer Discretionary Stocks?

Consumer discretionary stocks provide goods and services that consumers may choose to forego during an economic downturn. These products are non-essential[1] and hence consumers have the discretion to forego purchasing items. This is the opposite of consumer staples like foods and household goods. Consumer discretionary is a very wide sector and include industries like gambling, streaming services, and clothing.

What’s the Difference Between Consumer Discretionary and Consumer Cyclical?

Consumer discretionary and consumer cyclical refer to the same stock sector. The term consumer cyclical refers to how the demand for discretionary, non-essential, goods will wax and wane with the business cycle.

Notable Consumer Discretionary ETFs

Vanguard Consumer Discretionary ETF (VCR)

The Vanguard Consumer Discretionary ETFs is one of the largest ETFs focused on consumer discretionary stocks. Its market cap as August 2022 was $167 Billion with 311 different stocks in its basket[2]. The ETF follows the MSCI US investable market index ConsDiscretionary25/50 with the largest sub-sectors being[3]:

  • Internet & Direct Marketing Retail (24%)
  • Automobile Manufacturers (18%)
  • Restaurants (9%)
  • Home Improvement Retail (9%)

Consumer Discretionary Select SPDR Fund (XLY)

XLY is part of the very popular select SPDR funds. The fund holds 56 stocks and has an expense ratio of 0.10%. The market value of XLY is 19 Billion and does provide a dividend.

IShares Global Consumer Discretionary ETF (RXI)

RXI is another consumer discretionary ETF to choose from. It has an expense ratio of 0.40% and net assets of $318 Million. This ETF is composed of global equities with its top positions being [5]:

  • Tesla (TSLA – 10.13%
  • Amazon (AMZN) -9.57%
  • Home Depot (HD) – 4.53% The ETF has a global scale with about half of its companies from the U.S. and the rest coming from other parts of the world: RXI global breakdown
Source: RXI fact sheet[5]

Industries in the Consumer Discretionary Sector

  • Retail Distributors Direct – This would be companies like Target and Walmart
  • Retail Distributors Internet – These companies include Amazon and eBay
  • Automobiles – Examples include Tesla, Ford, and GM
  • Auto Components – Examples include BorgWarner and Axalta Coating Systems
  • Consumer Durables and Apparel – This includes stocks like Yeti Holdings and Nike
  • Hotels – These are well known brands likes Wyndham Hotels and Resorts
  • Restaurants – This includes Yum! Brands and McDonalds
  • Leisure – Examples include Carnival Corporation and Booking holdings

What Makes a Good Consumer Discretionary Stock?

  • A good consumer discretionary stock should protect itself from the cyclical nature of the consumer discretionary sector
  • Companies in this sector must manage their total debt and enterprise value. These companies need to be able to withstand a long recession by managing their debt and having a strong strategic debt plan
  • The company should consider diversifying to less the impact of their cyclical business. An example of this is Tesla diversifying into industrial batteries[6]. This new business segment lies in the industrial sector which is insulated from consumer cycles.

Mistakes to Avoid When Investing in Consumer Discretionary Stocks

There are many common mistakes made by new investors that are universal across investment decisions; however, consumer discretionary stocks have some unique challenges new investors should be aware of:

  • By their definition, consumer discretionary stocks are cyclical. When money is tight, these stocks will likely fall in value. This loss isn’t just investor psychology. These stocks will likely see a fall in revenue as well which won’t be reported until after the fall has occurred
  • Consumer discretionary stocks are much more well known and are part of many retail investor’s lifestyle. However, a well known company can still be over valued and the companies valuation should be compared to its valuation.
  • It is well known that these stocks are cyclical. However, trying to time this cyclical nature is not recommended for new investors. New investors should hold stocks for longer periods.

Consumer Discretionary Stocks and Volatility

Consumer discretionary stocks have inherent volatility due to the cyclical nature of the businesses in this sector. Consumer discretionary stocks ranked just behind Technology stocks in terms of volatility in the 2010s[7].


1). 3 Consumer Discretionary Stocks For Your Watchlist Today by Brandon Michael
2). Vanguard Consumer Discretionary ETF
3). VCR portfolio composition as of August 2022
4). Select Sector ETFs by SPDR
5). RXI fact sheet
6). Tesla Industrial Batteries
7). The 8 Most Volatile Sectors by Marc Davis

Sound investments
don't happen alone

Find your crew, build teams, compete in VS MODE, and identify investment trends in our evergrowing investment ecosystem. You aren't on an island anymore, and our community is here to help you make informed decisions in a complex world.

More Reads
Recent Stock Purchase September 2022

As you know by now I make a stock purchase every single month no matter what is going on in the world and despite the doom and gloom headlines. Perhaps I am naive or more of an optimist that we will get through these dark financial times somehow.

Will Nike Stock Recover?

Nike is an American multinational corporation that design, develops, manufactures and markets footwear, apparel, equipment and services worldwide.

5 Income Stocks for Retirees

When most people reach the age of 50, they start thinking about retirement. At this age, you need a strategy in place about housing, working, and income before retiring.

Mondelez International: Buy The Snack Giant

Slow and steady wins the race. It holds true for investing in equities because of reversion to the mean. For instance, the latest group of new tech stocks were trading at bubble valuations and plummeted when the Federal Reserve started tightening.

Monthly Dividend Stock In Focus: Pembina Pipeline

Midstream energy companies are widely-known to be a source of high dividend yields. Midstream operators benefit from favorable economics because of the continued need for oil. In addition, midstream companies are less exposed to commodity price risk than their upstream peers in the exploration and production industry.

Will it break through

At&t feels good to me this week

10 Solid Picks For A Rocky Market - Zen Investor

I searched for companies that are inexpensive relative to their fair value (margin of safety) and have above-average price and earnings growth prospects.

September 2022 Stock Considerations

With the start of a new trading month, it is time, once again, for me to highlight some of my potential stock buys for September. With all the recent market volatility there is no shortage of stocks that are looking seemingly cheaper when compared to the closing months of 2021.

Monthly Dividend Stock In Focus: Prospect Capital

Business Development Companies — or BDCs, for short — allow investors to generate income with the potential for robust total returns while minimizing the amount of tax that is paid at the corporate level.

The 5 Best Cheap Stocks To Buy Now

Everyone loves to buy something on sale. For investors, that means finding undervalued stocks. Although available during bull markets, investors usually find more cheap stocks during bear markets. Prices drop, sometimes falling too far, making some stocks a deal, like in 2022. Hence, now is a good time for investors to scour lists and find the best cheap stocks to buy.

Do great stocks go on sale during a down market?

Do great stocks go on sale during a down market? The short answer is: yes!

How to Double Your Returns by Actually Using Simple Strategies

They say the internet changed everything. Well, finally, that change has come to basic investing. It is now easy to double your returns from just a decade ago.

Dividend Stock Watch List: Lanny’s September 2022 Edition

Welcome back to another dividend stock watch list article! The stock market took a nose dive on August 26th, shedding over 3% in some instances on the overall valuation of the stock market.

3 Beaten-Down Dividend Growers for Income Investors

The bear market in 2022 has provided opportunities to buy solid companies at a discount. Fears about a recession and rising interest rates have punished equities.

Kilroy Realty (KRC): Undervalued REIT and 4.2% Yield

The markets had a wild ride down on Friday (8/26/2022). The SPDR S&P 500 ETF (SPY) saw a 14-point drop, about a 3.4% decline in a single trading day.

NextEra Energy Stock Dividend and Forecast

NextEra Energy Stock remained stable during the June lows and the growth in dividend is expected to grow annually by 10% through 2024.

The 3 Highest Yielding Dividend Aristocrats

Investors that want reliable income and ongoing dividend increases to offset inflation may be very interested in the Dividend Aristocrats.

Recent Stock Purchase II August 2022

With August ending and the markets giving us better buying opportunities, I decided to add to some of my existing positions.

2022 Tobacco Stocks List | The 6 Best Now, Ranked In Order

As a business owner, selling products that have high profit margins along with strong brand awareness and an exceptionally loyal customer base is strongly desirable.

Meta Stock: An Attractive Valuation

According to the long-term forecasts, the worth of Meta's stock will be $272 at the end of 2022 and $360 in 2023.

Resources for Publishers
Resources for New Investors
Boosted with BossCoin
Financial Literacy Leaders
Tom Hamilton
Wise Intelligent
Mark Robertson
Kevin Matthews II
Akeiva Ellis
Brendan Dale
Kenneth Chavis IV
Sharita Humphrey