It’s safe to say we’re in a volatile market right now. And that makes it hard to get a handle on trend-driven, consumer discretionary stocks.
No one is sure where the economy is or how much we write off what happened during the novel-coronavirus-induced lockdown. We’re not even sure if the lockdowns are over or if the economy will bounce back.
Early on, we looked to see what was happening in China, another massive economy, since it was about six weeks ahead of where the U.S. was. Yet it’s still grappling with the coronavirus and its economy is still trying to get back on track.
This all means your best bet is to look for the stocks that are benefiting from the current conditions and have the potential to continue that momentum into the new year, driven by consumer demand.
Thanks to my weekly scan of the markets with the Portfolio Grader tool I use to find Growth Investor plays, I have found seven consumer discretionary stocks to watch now, as they are already catching the eyes of investors and customers:
- Vista Outdoor (NYSE:VSTO)
- Sturm Ruger & Co (NYSE:RGR)
- Hovanian Enterprises (NYSE:HOV)
- Acushnet Holdings (NYSE:GOLF)
- Nio (NYSE:NIO)
- Thor Industries (NYSE:THO)
- Take-Two Interactive (NASDAQ:TTWO)
Let’s take a closer look into what makes each of these promising consumer discretionary stocks to consider now.
Consumer Discretionary Stocks to Watch: Vista Outdoor (VSTO)
This Minnesota-based firm only has a market cap of $703 million, but it owns a slew of brands that you may recognize: Bell, Giro, Eagle, CamelBak, Bushnell, Camp Chef, Otter and many more.
It has strong position in the ammunition sector. And during these times, being able to get outside with friends and family and stay socially distanced is a big deal. Shooting is one of those activities, along with many others that VSTO supports.
Gun stocks are moving up here and VSTO stock is one of the consumer discretionary stocks that’s a beneficiary to that trend, which should continue for a while.
The stock is up 71% in the past three months, but has plenty of growth left in it.
Sturm & Ruger & Co (RGR)
Sturm & Ruger is a direct play on the rise in gun purchases across the U.S. It was founded in 1949 in Connecticut and continues to focus on firearms manufacturing.
RGR stock hasn’t been this high since March 2016. And it’s likely to go higher since many people are taking to the outdoors to blow off some steam due to the lockdowns. And in many election cycles there’s a trend toward increased gun purchases as well.
It has a $1.3 billion market cap and given the current challenges there’s a good chance it has plenty of legs left for more upside. It also has a 1% dividend.
Hovanian Enterprises (HOV)
Hovanian is a relatively small homebuilder that has been in the mid- to upper-tier housing sector for 60 years now. It operates in 14 states, serving dozens of cities, usually in larger metropolitan areas or in exurbs where many of its bigger homes are. But in large metropolitan areas, like Washington, DC, the suburbs stretch for 40 miles in any direction.
Since the company has a relatively small market cap of around $140 million, this isn’t a big builder. It’s a targeted builder that looks to take advantage of trends within certain markets. That way it can focus on the kinds of homes it knows how to build within its demographics. That helps maintain profit margins and keeps the developments on schedule.
HOV also offers mortgage and title services to its homebuyers, which is an added source of revenue for homebuyers that may like the convenience of getting the whole package initially and can then look to refinance down the road. But with today’s interest rates, that isn’t a big problem since most rates are at multi-year lows.
Because it’s a relatively small company, HOV stock is a bit more leveraged to the cyclicality of the housing market. That’s a good thing in the current market. The stock is up 219% in the past year, with much of that coming in the past three months, where the stock has risen 228%. What’s more, the stock is still well off its 52-week highs.
Acushnet Holdings (GOLF)
If you don’t enjoy target shooting or hunting, there’s another way to get out this summer that is more about clubs than guns — golf.
Now as the old saying goes, golf is simply a good walk, spoiled. But a getting out and being able to enjoy a bit of sport is never a bad thing, especially now.
GOLF has been in the golf product business since 1910 and owns the Titleist and FootJoy brands, two of the biggest brands in the sport.
And remember, this is a global pandemic and golf is a global sport, so getting out on the links is going to be a significant desire everywhere.
GOLF has a respectable $2.6 billion market cap and is still trading at a decent valuation given that GOLF stock is up 60% in the past three months.
NIO stock has been trading in fits and starts since in listed in the U.S. in the fall of 2018.
It was met with a great deal of initial interest and traded around $10 when it IPO’d, and again, in February of last year. But it then ran into troubles as its performance wasn’t matching its promise.
There were battery and production issues and that weren’t helping the “Tesla of China” build much momentum.
But those troubles now seem behind it and its cars are now gaining international recognition at car shows.
It has three production models in the works, with one model already rolling off the assembly line. It also has a high-end performance car and an autonomous car in development. If there’s one thing I like for a long-term growth investment, it’s exposure to a hot, wide-ranging megatrend.
The electric vehicle market is hot, thanks to TSLA, and NIO is another beneficiary. The stock is up almost 200% in the past three months and still has plenty of headroom before it touches its old highs.
Thor Industries (THO)
With the traditional travel industry still clawing its way back to normalcy, one beneficiary is companies that make recreational vehicles (RVs).
RVs allow you to travel without having to go through a crowed airport and sit in a tin can for hours with a bunch of strangers.
RVs are becoming a big market for retirees who can travel without the challenge of contracting COVID-19 and can still travel the country at will. Thor offers models that are towable and motorized under a number of brands, in the U.S. and Europe.
This concept is catching on and Wall Street has noticed. THO stock is up nearly 220% in the past three months and yet it’s still reasonably priced for this market and has a 1.4% dividend.
Take-Two Interactive (TTWO)
While older generations get a bit stir crazy for some outdoor fun, younger generations are perfectly happy to sit and play video games.
And nowadays, if you play them online, you can play them with all your friends, regardless of their physical locations. Many people who left the gaming world are now returning since it offers welcome diversions and interactive stimulation beyond the people that you are quarantined with. And even they can play with you.
Take-Two is one of the leading video game companies out there — and it’s one of the best consumer discretionary stocks to consider now. After all, it owns the wildly popular Grand Theft Auto collection as well as Red Dead, Borderlands and NBA 2k.
Usually gaming companies are built around their Q3 launches of their best titles. But the pandemic has changed all that. These stocks are hot now and this trend could play out for a long time to come.
TTWO stock is up 41% in the past three months and is making it back to its 52-week highs. Q3 and Q4 could be huge.
That being said, if you want a stock with strong momentum as well as a reliable dividend, you’ve got to target one of the huge megatrends picking up steam.
One I’m particularly excited about now is a major upgrade across the telecom industry, across the world.
The 5G Buildout Is an Incredible Opportunity for Investors Right Now
Within two years, most cell phones will be 5G enabled and be able to wirelessly handle television streaming. With 5G, we’ll have cable modem speeds on any device; no need to plug in. That’s a big deal for rural areas … the very same areas that are also key to President Donald Trump’s reelection. So, by pushing 5G over the goal line, Trump will deliver a big win for his base — and strike a blow against Chinese rivals like Huawei Technologies.
But big picture, 5G is about much more than trade wars and faster downloads. Because 5G is 100 times faster than 4G, it’ll allow your wireless internet devices to work in real time. That advancement is a game changer for tech companies.
With the 5G infrastructure market set to grow at an annual rate of 67% over the next 10 years, the entire market will go from $780 million to nearly $48 billion. This buildout is where I see opportunity with 5G stocks now.
Cable companies can do their best to fight back with fiber optics … but they can’t compete with the convenience of a smartphone, once it’s got ultra-fast 5G. That’s how my 5G technology play will capture more market share from the broadband cable companies.
The stock I’m targeting is enjoying an influx of big money on Wall Street, and it has good fundamentals, too — making it a “Strong Buy” in my Portfolio Grader system now.
When you do, you’ll see how to claim a free copy of my investment report, The King of 5G “Turbo Button” Technology, which has full details on this company — and what makes it such a great buy now.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.