The 2020 pandemic hit many companies hard, while other companies took it as a chance to grow, seemingly unaffected by the state of the world around them. NVIDIA (NASDAQ:NVDA) came out as one of those thriving businesses and achieved gains of 122% in 2020. The company’s graphics processing units (GPUs) were present and needed for trends that accelerated exponentially due to the pandemic, boost...
If you are interested in making any type of investment in the shopping business, you need to understand some things first. When it comes to the shopping market, it can come in one of two different variants: consumer staples companies and consumer discretionary companies.
Consumer staples companies give to those shopping companies that offer and sell the absolute necessities for any day-to-day activity. On the other hand, consumer discretionary companies refer to those who sell products that people tend to buy just because “it would be nice to have it” and have the extra means to afford it.
Why should you mind this before settling on a company to invest in?
Because, depending on the current status of the economy as a whole, both companies can go through very different performance scenarios.
It is common for consumer discretionary stocks to outperform their counterpart. On the flip side, on an economic decline, consumer staples tend to outperform instead.
So, depending on the global context you might find yourself in, you might also dedicate some time to evaluate which one is your better investment option.
However, if you are dedicated to the idea of investing in a consumer discretionary stock, here we have compiled a list of recommendable options you might be interested in:
Top consumer discretionary stocks
Consumer discretionary stocks belong to companies that count on consumers spending money on their behalf instead of doing it for a necessity. This includes, but is not limited to:
- tourism-related operations
- several kinds of retail stores
- electronic product manufacturers
- home furnishing services
- luxury goods companies
Now that you have a better idea of what kind of companies might be included in this category, here are some that might be of interest to you for possible investments since they’re considered among the best in the business.
The well-known and well-established footwear company has been around for around half a century. It has dominated its respective market with innovative products that are both available and affordable to a broad range of consumers.
Its current value on the market is way ahead of its competitors, and the current extent of its territory covers locations that allow for fast-growing earnings.
As a safeguard for potential economic recessions (such as the 2020 pandemic, more on that later), Nike has a strong presence in the world of e-commerce and other services provided via apps. Also, the company can reduce costs by limiting the extent of its marketing presence.
In other words, Nike has itself covered even at low market points.
Ever since Starbucks first opened its doors to the public, it has quickly become part of the daily routine for many people worldwide.
Starbucks clear tapped into the idea of customers deserving a small treat regularly, and popularized it, which is an essential part of its overall success.
Even when facing potential low points, their brand is strong enough (both with the market and with consumers) to manage itself around any kind of trouble.
McDonald’s is an excellent example of a company that has worked hard to adapt to modern times and modern consumers’ needs.
Over the years, they have consistently innovated with technologies that improve their services, such as digital menus, an automated kiosk for ordering, and online capabilities. Nowadays, McDonald’s is counting on their most accessible and worth-coming-back-to service ever.
As history has proven, McDonald’s is a company that will always work its hardest to maintain relevancy, which demonstrates that it is a great investment option as well.
- TJX Companies
TJX Companies is a retail company that has found success with a model that hasn’t been successfully replicated within their industry. In short, they take into consideration their merchandise that has already been discounted, that presented manufacturer errors or that initially belonged to cancelled orders. Then, they sell it for prices with up to 60% discount from the original price.
This practice has generated vast amounts of profits for the company, and it comes with great working-room for exponential growth.
Most recently, the retail industry had to face a temporal shutdown, meaning that TJX Companies had to temporarily close as well. Nevertheless, when it came time to reopen, their sales skyrocketed as people were coming in masses to buy their products once again.
TJX Companies might also be a great investment opportunity for you since their reputation for incredibly low prices has helped them overcome low points for the economy.
- Walt Disney
Without a doubt, one of the most recognizable and most prominent names in the entertainment industry is Walt Disney. It is obvious why, since the various movies, television shows and theme parks the brand has been offering for decades have been immensely popular worldwide.
Not only that, the company is way more than just the Disney Brand. Over time, it has expanded to other markets and territories using different brands, such as ABC, ESPN, Marvel, Star Wars, Fox, and others.
Just by the sheer amount of content that the company offers and the massive territory it covers (both physically and digitally), it is clear that Disney has enough safeguards to maintain a constant audience while still generating high revenues regardless of how the economy’s doing.
Consumer discretionary stocks in pandemic times
Out of all the markets in existence, consumer discretionary has been one of the most affected by the 2020 pandemic. Many businesses haven’t operated as they usually would to maintain social distancing and exclusively manage a stay-at-home workflow.
This is probably the best example of how both consumer staple companies and consumer discretionary companies are highly influenced by the economy’s current status, especially since it is still an ongoing scenario. In the case of consumer discretionary companies, lower performance than expected.
However, with recent efforts to end the pandemic, some companies have noticed slow to moderate increases in sales. Some investors might want to take advantage of this situation and make investments in this type of stock, expecting high amounts of profit appearing when all operations return to normal.
If companies are already noticing increases with only a small amount of customers returning, by the time it all ends, the number of people coming back will most likely make them increase exponentially.
However, you should keep two things in mind:
First, an exact date for the pandemic to end isn’t set, so the actual moment for your investment to make desirable returns is still undefined. For that reason, you should try and make your investment a long-term one for it to be of the most value to you.
Second, try to evaluate which services are the ones that will have the highest spikes when they open at full capacity since those will make the quickest returns. Try to take a look at the restaurant and travel businesses, for example.