Consumer discretionary stocks are yet again on investors’ radars this week. This is because President Joe Biden’s $1.9 trillion stimulus package was advanced out of the House Budget Committee on Monday. According to CNBC, the general sentiment now is that the bill will advance to the Senate after the House vote later this week. In turn, this would aid in bringing about another round of stimulus checks. Of course, this could lead to an influx of consumer dollars into the consumer discretionaries industry which would benefit both companies and investors alike.
As a result, investors then flocked towards some of the top consumer discretionary stocks right now. For instance, entertainment giant Disney’s (NYSE: DIS) shares are up by over 7% since this week’s opening bell. At the same time, the travel section of the industry also seems to be gaining traction as well. Companies such as Carnival Cruises (NYSE: CCL) and American Airlines (NASDAQ: AAL) are up by over 7% as well this week. Aside from increased consumer spending on their core businesses, these companies also have another incoming tailwind. That would be the impending end of the coronavirus pandemic. Indeed, growing nationwide inoculation efforts could continue to incentivize consumers to spend on post-pandemic businesses. Given all of this activity, would it be a good time to invest in these top consumer discretionary stocks?Top Consumer Discretionary Stocks To Watch
- MGM Resorts International (NYSE: MGM)
- Wynn Resorts Limited (NASDAQ: WYNN)
- Lovesac Company (NASDAQ: LOVE)
- Peloton Interactive Inc. (NASDAQ: PTON)
MGM is a global hospitality and entertainment company. In brief, the company operates 29 unique hotel destinations across the U.S. and Macau. Aside from providing best-in-class hotel services, the company also offers U.S. sports betting and online gaming services through its BetMGM venture. To this end, you could say that MGM is making the most of its current situations. This would be in light of growing online betting trends fueled by the pandemic. Furthermore, the company could stand to benefit from increased post-pandemic hotel bookings. This would explain why MGM stock has been on a tear with year-to-date gains of over 33%. Seeing as it hit a new five-year high during intraday trading yesterday, could MGM be looking at better days ahead?
If anything, it seems that MGM is looking to maintain its current momentum. Last Friday, the company announced a new partnership between its BetMGM venture and Topgolf Entertainment Group. To summarize, the duo will be working towards creating an integrated sports betting and entertainment experience.Source: TD Ameritrade TOS
Seeing as Topgolf offers unique and interactive entertainment services, this would synergize well with MGM’s sports betting portfolio. Overall, the partnership will allow MGM to engage with a larger consumer base both in the digital and physical spaces. All things considered, will you be watching MGM stock?
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Following that we have Wynn Resorts. The Nevada-based company develops and operates high-end hotels and casinos. Similar to our previous entry, Wynn has also shown its resilience throughout the pandemic. Evidently, the company has leveraged its existing casino services to create a quality online gaming division. The division in question is known as WynnBET. In fact, WYNN stock is looking at gains of over 20% since the company’s latest update on WynnBET earlier this month.
In particular, WynnBET was conditionally approved for sports gaming in Tennessee on February 9. The local Sports Wagering Committee approved WynnBET to operate its online sports betting app in the state. No doubt, this is excellent news for Wynn in general. Tennessee is the ninth state that WynnBET has gained market access to as Wynn fast-tracks the growth of its online betting portfolio.Source: TD Ameritrade TOS
Moreover, the company announced last week that it maintained all of its 22 Forbes Travel Guide Five-Star awards this year. Simply put, the company continues to retain the quality of its core business even while it expands its digital services. With Wynn firing on all cylinders, could it be a good time to watch WYNN stock? I’ll let you decide.
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Another top consumer discretionary company to consider now would be Lovesac. The furniture retailer specializes in developing and marketing its patented modular furniture system, Sactionals. To begin with, Sactionals are sofas that consist of two combinable components, “seats” and “sides”. The good thing about this is that users can customize the layout of Sactionals to suit living spaces of varying sizes.
Additionally, the company also sells bean bags as well. With consumers spending more time at home, there has been a boom in home improvement retail spending. In theory, this would boost demand for Lovesac’s offerings. Likewise, LOVE stock is currently looking at gains of over 1,200% since the March 2020 lows.Source: TD Ameritrade TOS
In terms of business highlights, the company reported green across the board in its third-quarter fiscal back in December. In it, Lovesac posted a 43.5% year-over-year increase in total revenue for the quarter. On top of that, it ended the quarter with $47.69 million in cash on hand, a 70% year-over-year bump. This would show how successful Lovesac’s transition towards e-commerce has benefited the company. If you think about it, this also lowers overhead costs and inventory costs in the long run. With an estimated 1% share in the U.S. sofa market in 2020, there would be more room for Lovesac to grow. Do you think LOVE stock could follow suit?Peloton Interactive Inc.
Last but not least, we turn to New-York based exercise equipment and media company, Peloton. For the uninitiated, Peloton develops and markets an array of home exercise equipment. The likes of which have been a go-to for consumers looking to improve their daily exercise routines amidst the pandemic. That’s not all. The company also operates a global leading interactive fitness platform with over 4.4 million members.
Essentially, Peloton makes top-quality exercise equipment and also provides digital fitness classes through its proprietary platform. More importantly, PTON stock is looking at gains of over 365% in the past year. Despite all of this, Peloton does not seem to be resting on its laurels just yet.Source: TD Ameritrade TOS
According to CNN, the company will be releasing a new treadmill in the U.S. later this week. The “Tread” is a leaner and more affordable version of Peloton’s flagship Tread+ treadmill. In detail, the Tread will retail at the price of $2,495. Notably, this is almost half the price of the Tread+. All in all, I would say that this is a smart play by Peloton. It would allow for more widespread adoption of its popular offerings. If that wasn’t enough, the company also invested $100 million towards improving its delivery services earlier this month. Could this make PTON stock a top consumer discretionary stock to watch? You tell me.