The performance of consumer discretionary businesses is closely linked to economic cycles. This sensitive demand profile can cause the industry to underperform when macro uncertainty enters the fray, and over the past six months, its 9.3% return has fallen short of the S&P 500’s 13% gain.
Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. On that note, here are two consumer stocks we think can generate sustainable market-beating returns and one we’re steering clear of.
One Consumer Discretionary Stock to Sell:
Accel Entertainment (ACEL)
Market Cap: $822.9 million
Established in Illinois, Accel Entertainment (NYSE: ACEL) is a provider of electronic gaming machines and interactive amusement terminals to bars and entertainment venues.
Why Are We Wary of ACEL?
- Performance surrounding its video gaming terminals sold has lagged its peers
- Estimated sales growth of 4.9% for the next 12 months implies demand will slow from its two-year trend
- Poor free cash flow margin of 4.8% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
At $9.89 per share, Accel Entertainment trades at 10.4x forward P/E. Check out our free in-depth research report to learn more about why ACEL doesn’t pass our bar.
Two Consumer Discretionary Stocks to Watch:
Deckers (DECK)
Market Cap: $11.76 billion
Established in 1973, Deckers (NYSE: DECK) is a footwear and apparel conglomerate with a portfolio of lifestyle and performance brands.
Why Are We Positive On DECK?
- Brand and reputation resonate with consumers, as seen in its above-market 18.8% annual sales growth over the last five years
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Returns on capital are climbing as management makes more lucrative bets
Deckers’s stock price of $80.68 implies a valuation ratio of 13x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
Frontdoor (FTDR)
Market Cap: $3.54 billion
Established in 2018 as a spin-off from ServiceMaster Global Holdings, Frontdoor (NASDAQ: FTDR) is a provider of home warranty and service plans.
Why Do We Like FTDR?
- Share buybacks propelled its annual earnings per share growth to 19%, which outperformed its revenue gains over the last five years
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures, and its returns are growing as it capitalizes on even better market opportunities
- Returns on capital are growing as management capitalizes on its market opportunities
Frontdoor is trading at $49.10 per share, or 12x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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