Most consumer discretionary businesses succeed or fail based on the broader economy. Lately, it seems like demand trends have worked in their favor as the industry has returned 10.9% over the past six months, similar to the S&P 500.
Nevertheless, this stability can be deceiving as many companies in this space lack recurring revenue characteristics and ride short-term fads. Taking that into account, here is one consumer stock poised to generate sustainable market-beating returns and two that may face trouble.
Two Consumer Discretionary Stocks to Sell:
Opendoor (OPEN)
Market Cap: $4.76 billion
Founded by real estate guru Eric Wu, Opendoor (NASDAQ: OPEN) offers a technology-driven, convenient, and streamlined process to buy and sell homes.
Why Should You Sell OPEN?
- Number of homes purchased has disappointed over the past two years, indicating weak demand for its offerings
- Projected 44.9 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
- Negative EBITDA restricts its access to capital and increases the probability of shareholder dilution if things turn unexpectedly
At $5.91 per share, Opendoor trades at 1.1x forward price-to-sales. If you’re considering OPEN for your portfolio, see our FREE research report to learn more.
Lucky Strike (LUCK)
Market Cap: $987.2 million
Born from the transformation of traditional bowling alleys into modern entertainment destinations, Lucky Strike (NYSE: LUCK) operates bowling alleys and other entertainment venues with upscale amenities, arcade games, and food and beverage services across North America.
Why Do We Steer Clear of LUCK?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and in-store experience
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
- High net-debt-to-EBITDA ratio of 7× increases the risk of forced asset sales or dilutive financing if operational performance weakens
Lucky Strike’s stock price of $7.07 implies a valuation ratio of 40.4x forward P/E. Dive into our free research report to see why there are better opportunities than LUCK.
One Consumer Discretionary Stock to Watch:
Live Nation (LYV)
Market Cap: $29.96 billion
Owner of Ticketmaster and operator of music festival EDC, Live Nation (NYSE: LYV) is a company specializing in live event promotion, venue management, and ticketing services for concerts and shows.
Why Is LYV Interesting?
- Annual revenue growth of 40.3% over the last five years was superb and indicates its market share is rising
- Industry-leading 32.7% return on capital demonstrates management’s skill in finding high-return investments, and its returns are growing as it capitalizes on even better market opportunities
- Rising returns on capital show management is finding more attractive investment opportunities
Live Nation is trading at $129.14 per share, or 72.6x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
Stocks We Like Even More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check 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 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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