In this article we will take a look at the 15 best consumer discretionary stocks to buy now. You can skip our detailed analysis of the consumer discretionary industry’s outlook for 2021, and go directly to the 5 Best Consumer Discretionary Stocks to Buy Now.

Consumer discretionary businesses sell items that are non-essential yet desirable for consumers. These include sports equipment, entertainment, luxury goods, home furnishing, automobiles, etc. Consumer discretionary stocks thrive during the period of economic stability. With the higher rate of employment, people tend to spend more leisurely.

Though 2020 was the year of economic uncertainties, the consumer discretionary sector, as a whole, managed to stand its ground. Consumer Discretionary Select Sector SPDR Fund (NYSE: XLY) has delivered a return of 34.03% to shareholders in the past year. Some sectors performed well compared with the others. According to Deloitte, in the U.S., personal consumption expenditure, or PCE, grew by 18% on recreational goods in 2020. Due to pandemic-related restrictions, health enthusiasts ended up setting up home gyms. Similarly, remote work also led the PCE on furnishing equipment to grow by 5.7%. On the other hand, spending on footwear/apparel and recreational services fell by 7.7% and 31.8%, respectively.

According to a report by McKinsey & Company, the sales of discretionary products are likely to hike in the U.S. as the country is recovering from the pandemic crisis due to vaccine rollout and stimulus payments. The report states that over 50% of the consumers, including millennials, plan to spend extra on beauty products, electronics, and apparel. Deloitte’s report, United States Economic Forecast, also stated that PCE is expected to grow by 7.6% in 2021.

Consumer discretionary companies like Comcast Corporation (NASDAQ: CMCSA), Nike, Inc. (NYSE: NKE), The Home Depot, Inc. (NYSE: HD), and Lowe’s Companies, Inc. (NYSE: LOW) have managed to increase their revenues in the past year or so. The demand for their products has risen significantly. The revenue of Nike, Inc. (NYSE: NKE) presented a massive growth of 96% year-over-year at $12.3 billion, mainly driven by increased demand in North America and China. Similarly, The Home Depot, Inc. (NYSE: HD) generated $37.5 billion in revenue, presenting 32.7% year-over-year growth.

In June, JP Morgan viewed the retail sector as one of the fastest expanding after the reopening of stores across the world. The investment bank has released a list of its top picks for investors. According to the firm, Target Corporation (NYSE: TGT), Williams-Sonoma, Inc. (NYSE: WSM), and Ulta Beauty, Inc. (NASDAQ: ULTA), The Home Depot, Inc. (NYSE: HD), and Lowe’s Companies, Inc. (NYSE: LOW) are some of the best consumer discretionary stocks to buy now.

According to FactSet, the revenue of the consumer discretionary sector is expected to present a 19.7% year-over-year growth in the second quarter of 2021. Automobile, apparel and luxury good, hotels and restaurants, and auto components are expected to remain winners in the sector, with a 60% year-over-year growth. One of the most famous luxury fashion retailers L Brands, Inc. (NYSE: LB) generated $3.02 billion in revenue in Q1, up from $1.65 billion in the prior-year quarter. Moreover, the LB stock has soared by 297.9% in the past year. Similarly, Capri Holdings Limited’s (NYSE: CPRI) revenue stood at $1.2 billion and the stock has gained 195% in the past year.

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With this context, let’s analyze our list of the 15 best consumer discretionary stocks to buy now. We took into account hedge fund sentiment, analysts’ ratings, long-term growth potential, and fundamentals while choosing these stocks.

Why use hedge fund sentiment to choose stocks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Best Consumer Discretionary Stocks to Buy Now

15. Shutterstock, Inc. (NYSE: SSTK)

Number of Hedge Fund Holders: 18

Shutterstock, Inc. (NYSE: SSTK) is a global technology company that offers an innovative platform for high-quality pictures, tools, and services. Along with this, the company provides stock music, stock images, and creative editing tools. Over 1 million people contribute to the company’s content and more than 200,000 images are added to the library every day. The company has customers in over 150 countries.

In Q1 2021, Shutterstock, Inc. (NYSE: SSTK) reported a net income of $36.6 million, up from $9.1 million during the same period last year. The EPS was recorded at $0.98, beating the consensus of $0.70. The revenue presented a 14% year-over-year growth at $183.3 million. Subscribers' revenue also grew by 20% and accounted for $76.5 million of the gross revenue.

Image collection and footage collection also increased by 12% and 17%, respectively. In the first quarter, the company paid over $7.6 million in cash dividends to shareholders. Due to strong results, the company raised its FY21 guidance and expects revenue between $720 million to $730 million. In April, Truist raised its price target on Shutterstock, Inc. (NYSE: SSTK) to $102, with a ‘Buy’ rating. Needham also initiated its coverage on Shutterstock, Inc. (NYSE: SSTK) with a ‘Buy’ rating and appreciated the company’s growing subscription revenue. In the past year, SSTK has delivered a 164% return to shareholders.

As of Q1 2021, 18 hedge funds tracked by Insider Monkey have positions in Shutterstock, Inc. (NYSE: SSTK), worth $207.8 million. With 1.2 million shares, worth $109.3 million, Renaissance Technologies is the company’s largest shareholder.

Like Nike, Inc. (NYSE: NKE), Comcast Corporation (NASDAQ: CMCSA), Lowe’s Companies, Inc. (NYSE: LOW), The Home Depot, Inc. (NYSE: HD), Starbucks Corporation (NASDAQ: SBUX), Target Corporation (NYSE: TGT), and L Brands, Inc. (NYSE: LB), Shutterstock, Inc. (NYSE: SSTK) is one of the best consumer discretionary stocks to buy now.

Bernzott Capital Advisors released its fourth-quarter 2020 investor letter and mentioned Shutterstock, Inc. (NYSE: SSTK) and other stocks in it. Here is what the firm has to say about SSTK:

14. The Lovesac Company (NASDAQ: LOVE)

Number of Hedge Fund Holders: 18

The Lovesac Company (NASDAQ: LOVE) is an American furniture company that designs and manufactures a special kind of couch, known as Sactional. These couches are made of seats and sides that are rearrangeable through a tool-free interlocking system. It has over 70 company-owned showrooms with headquarters in Connecticut, U.S.

In Q1 FY22, The Lovesac Company (NASDAQ: LOVE) reported a net income of $2.1 million and EPS of $0.13, beating the consensus by $0.71. The company generated $82.9 million in revenue, up 52.5% from $54.4 million in the prior-year quarter. Comparable sales grew by 48.8% year-over-year. Comparable showroom sales remained the winner in the first quarter, as the segment showed a growth of 182.7%.

The Lovesac Company (NASDAQ: LOVE) attributed the strong numbers to showroom sales, after the resumption of normal activities. In June, BTIG raised its price target on the The Lovesac Company (NASDAQ: LOVE) stock with a ‘Buy’ rating. The firm appreciated the company’s massive growth in revenue as well as low production and warehouse costs. DA Davidson, Stifel and Craig-Hallum also raised their price targets on LOVE in June. In the past year, the LOVE stock has delivered a 128% return to shareholders.

As of Q1 2021, 18 hedge funds have positions in The Lovesac Company (NASDAQ: LOVE), up from 14 in the previous quarter. Scopus Asset Management is the company’s biggest shareholder, with shares worth $47.4 million.

Like Nike, Inc. (NYSE: NKE), Comcast Corporation (NASDAQ: CMCSA), Lowe’s Companies, Inc. (NYSE: LOW), The Home Depot, Inc. (NYSE: HD), Starbucks Corporation (NASDAQ: SBUX), Target Corporation (NYSE: TGT), and L Brands, Inc. (NYSE: LB), The Lovesac Company (NASDAQ: LOVE) is one of the best consumer discretionary stocks to buy now.

13. Leggett & Platt, Incorporated (NYSE: LEG)

Number of Hedge Fund Holders: 24

Leggett & Platt, Incorporated (NYSE: LEG) is an American manufacturer and furnishing company. Leggett & Platt, Incorporated (NYSE: LEG) was founded in 1883 and has headquarters in Missouri, U.S. It mainly specializes in manufacturing products that can be used in furniture, home, bedding, offices, seating, automobiles, and airplanes. LEG stands thirteenth on our list of the best consumer discretionary stocks to buy now.

In Q1 2021, Leggett & Platt, Incorporated (NYSE: LEG) reported net earnings of $355 million, up from $253 million during the same period last year. The company generated a revenue of $1.51 billion, presenting a 10% year-over-year growth. The EPS for the quarter stood at $0.64, beating the consensus by $0.22. In the first quarter, the board also increased the quarterly dividend to $0.42 per share. Due to strong quarterly results, the company raised its FY21 guidance by 17% compared with 2020 and expects revenue in the range of $4.8 to $5.0 billion and EPS of $2.55 to $2.75. In May, Raymond James raised its price target to $60 on Leggett & Platt, Incorporated (NYSE: LEG), with an ‘Outperform’ rating on the shares. Since the beginning of the year, Leggett & Platt, Incorporated (NYSE: LEG) has delivered a 35.19% return to shareholders.

The hedge funds are also taking interest in Leggett & Platt, Incorporated (NYSE: LEG), as 24 funds have positions in the company in Q1 2021, up from 20 in the previous quarter. The total value of these stakes is $83.2 million.

Like Nike, Inc. (NYSE: NKE), Comcast Corporation (NASDAQ: CMCSA), Lowe’s Companies, Inc. (NYSE: LOW), The Home Depot, Inc. (NYSE: HD), Starbucks Corporation (NASDAQ: SBUX), Target Corporation (NYSE: TGT), and L Brands, Inc. (NYSE: LB), Leggett & Platt, Incorporated (NYSE: LEG) is one of the best consumer discretionary stocks to buy now.

12. Skechers U.S.A., Inc. (NYSE: SKX)

Number of Hedge Fund Holders: 29

Skechers U.S.A., Inc. (NYSE: SKX) is an American lifestyle footwear company that manufactures and designs footwear for men, women, and children. The company is one of the biggest athletic footwear companies in the world. It also offers accessories, apparel, scrubs, etc. Founded in 1992, the company has headquarters in California, U.S. Skechers U.S.A., Inc. (NYSE: SKX) ranks twelfth on our list of the best consumer discretionary stocks to buy now.

In Q1 2021, Skechers U.S.A., Inc. (NYSE: SKX) reported net earnings of $98.6 million, up from $49 million during the same period last year. The EPS was recorded at $0.63, beating the market consensus by $0.17. The consolidated revenue grew by 15% year-over-year at $1.42 billion. In the first quarter, e-commerce sales grew by 143%. For Q2 2021, Skechers U.S.A., Inc. (NYSE: SKX) expects revenue in the range of $1.45 billion to $1.50 billion. In April, JP Morgan appreciated the company’s first-quarter earnings and upgraded the SKX stock to an ‘Overweight’ rating. Similarly, in July, Deutsche Bank raised its price target on SKX to $62, with a ‘Buy’ rating. The SKX stock gained 67.5% in the past year.

At the end of Q1 2021, 29 hedge funds tracked by Insider Monkey have positions in Skechers U.S.A., Inc. (NYSE: SKX), worth $531.7 million. Pzena Investment Management is the leading shareholder of the company, with 3.8 million shares, worth $162.3 million.

Like Nike, Inc. (NYSE: NKE), Comcast Corporation (NASDAQ: CMCSA), Lowe’s Companies, Inc. (NYSE: LOW), The Home Depot, Inc. (NYSE: HD), Starbucks Corporation (NASDAQ: SBUX), Target Corporation (NYSE: TGT), and L Brands, Inc. (NYSE: LB), Skechers U.S.A., Inc. (NYSE: SKX) is one of the best consumer discretionary stocks to buy now.

11. Williams-Sonoma, Inc. (NYSE: WSM)

Number of Hedge Fund Holders: 29

Williams-Sonoma, Inc. (NYSE: WSM) is an American retail company that deals in kitchen-wares and home furnishing products. WSM ranks eleventh on our list of the best consumer discretionary stocks to buy now. As of 2021, the company has more than 625 stores located in over 60 countries. It is headquartered in California, U.S.

Williams-Sonoma, Inc. (NYSE: WSM) announced strong Q1 2021 results on 26^th May 2021. Williams-Sonoma, Inc. (NYSE: WSM) reported net earnings of $227.8 million, up from $35.4 million during the same period last year. The EPS beat the market consensus by $0.10 at $2.93. Net revenue also grew by 40.4% year-over-year at $1.74 billion.

Pottery Barn generated $679 million, whereas West Elm accounted for $477 million of the gross revenue. Due to the strong numbers, the company raised its guidance for the fiscal year 2021. The board of the company declared a quarterly dividend of $0.59 per share. In June, BofA upgraded Williams-Sonoma, Inc. (NYSE: WSM) to ‘Neutral’, with a $180 price target. Other investment banks such as Wells Fargo, Wedbush, and Loop Capital also raised their price targets on WSM in May. Since the beginning of the year, Williams-Sonoma, Inc. (NYSE: WSM) has returned 49.9% to shareholders and has gained 82% in the past year.

As of Q1 2021, 29 hedge funds tracked by Insider Monkey have positions in Williams-Sonoma, Inc. (NYSE: WSM), worth $758.3 million. With over 2 million shares, worth $364.4 million, Select Equity Group is the largest shareholder of the company.

Like Nike, Inc. (NYSE: NKE), Comcast Corporation (NASDAQ: CMCSA), Lowe’s Companies, Inc. (NYSE: LOW), The Home Depot, Inc. (NYSE: HD), Starbucks Corporation (NASDAQ: SBUX), Target Corporation (NYSE: TGT), and L Brands, Inc. (NYSE: LB), Williams-Sonoma, Inc. (NYSE: WSM) is one of the best consumer discretionary stocks to buy now.

10. Hasbro, Inc. (NASDAQ: HAS)

Number of Hedge Fund Holders: 31

Hasbro, Inc. (NASDAQ: HAS) is an American gaming and entertainment company that produces toys, media assets, and board games. Some of the company’s famous products include G.I. Joe, Transformers, Micronauts, Monopoly, Scrabble, Trivial Pursuit, etc. It was founded in 1923 and is operating in over 35 companies. HAS ranks tenth on our list of the best consumer discretionary stocks to buy now.

In Q1 2021, Hasbro, Inc. (NASDAQ: HAS) reported net earnings of $138.4 million, up 78% from $77 million during the same period last year. The EPS of $1.00 beat the estimate by $0.35. The consolidated revenue stood at $1.11 billion, 14% of which was generated by consumer products and digital gaming accounted for 15%. The company paid $93.4 million in dividends in the first quarter and declared a quarterly dividend of $0.68 per share. In April, KeyBanc raised its price target on the HAS stock to $105, with an ‘Overweight’ rating on the shares. After hitting an all-time low of $46 in March 2020, the HAS stock has been consistent, gaining 20.5% in the past year.

As of Q1 2021, 31 hedge funds tracked by Insider Monkey have positions in Hasbro, Inc. (NASDAQ: HAS), worth over $277 million. Scopus Asset Management is the largest shareholder of the company, with shares worth $57.6 million.

Like Nike, Inc. (NYSE: NKE), Comcast Corporation (NASDAQ: CMCSA), Lowe’s Companies, Inc. (NYSE: LOW), The Home Depot, Inc. (NYSE: HD), Starbucks Corporation (NASDAQ: SBUX), Target Corporation (NYSE: TGT), and L Brands, Inc. (NYSE: LB), Hasbro, Inc. (NASDAQ: HAS) is one of the best consumer discretionary stocks to buy now.

9. Ulta Beauty, Inc. (NASDAQ: ULTA)

Number of Hedge Fund Holders: 46

Ulta Beauty, Inc. (NASDAQ: ULTA) is an American chain of beauty stores with headquarters in Illinois. The company manufactures and markets cosmetics, skincare products, fragrances, body and hair care products, and beauty tools. ULTA ranks ninth on our list of the best consumer discretionary stocks to buy now.

In Q1 2021, Ulta Beauty, Inc. (NASDAQ: ULTA) reported a net income of $230.3 million, up from $78.5 million during the same period last year. The EPS of $4.10 beat the market consensus by $2.15. Net sales presented 65.2% year-over-year growth at $1.9 billion, massively driven by the cosmetic segment which accounted for 45% of the gross sales. On the other hand, skincare products generated 19% of the revenue. Due to the strong results, the company revised its guidance and expects revenue in the range of $7.7 billion to $7.8 billion. Many investment banks recently raised their price targets on the ULTA stock, such as Loop Capital, DA Davidson, and Morgan Stanley. In July, Raymond James upgraded ULTA to ‘Outperform’ with a $395 price target. In the past 12 months, the ULTA stock has delivered a 63.7% return to shareholders.

The number of hedge funds having positions in Ulta Beauty, Inc. (NASDAQ: ULTA) increased to 46 in Q1, compared with 43 in the previous quarter. The total value of these stakes is $1.43 billion. Select Equity Group is the largest shareholder of the company, with 2.3 million shares, worth $730.7 million.

Like Nike, Inc. (NYSE: NKE), Comcast Corporation (NASDAQ: CMCSA), Lowe’s Companies, Inc. (NYSE: LOW), The Home Depot, Inc. (NYSE: HD), Starbucks Corporation (NASDAQ: SBUX), Target Corporation (NYSE: TGT), and L Brands, Inc. (NYSE: LB), Ulta Beauty, Inc. (NASDAQ: ULTA) is one of the best consumer discretionary stocks to buy now.

8. Capri Holdings Limited (NYSE: CPRI)

Number of Hedge Fund Holders: 47

Capri Holdings Limited (NYSE: CPRI) is a fashion luxury company with headquarters in New York, U.S. CPRI stands eighth on our list of the best consumer discretionary stocks to buy now. The company sells clothes, watches, fragrances, handbags, shoes, and other fashion accessories. It was founded in 1981 by one of the most acclaimed designers, Michael Kors.

In Q4 FY21, Capri Holdings Limited (NYSE: CPRI) reported a net income of $59 million, up from $16 million in the prior-year quarter. The EPS was recorded at $0.38, beating the estimate by $0.36. The company reported an 80% growth in e-commerce sales, with a 13% growth in retail sales.

Michael Kors accounted for $838 million of the gross revenue, whereas Versace generated $235 million in the fourth quarter. For Q1 FY22, the company expects revenue of approximately $1.1 billion, with EPS of $0.75. In July, Goldman Sachs initiated its coverage on the CPRI stock with a price target of $56. MKM Partners, Morgan Stanley, and Credit Suisse also raised their price targets on CPRI due to strong quarterly earnings. In the past year, the CPRI stock has soared by 195%.

As of Q1 2021, 47 hedge funds have positions in Capri Holdings Limited (NYSE: CPRI), up from 42 in the previous quarter. Rima Senvest Management is the biggest shareholder of the company, with over 3.7 million shares, worth $193.2 million.

Like Nike, Inc. (NYSE: NKE), Comcast Corporation (NASDAQ: CMCSA), Lowe’s Companies, Inc. (NYSE: LOW), The Home Depot, Inc. (NYSE: HD), Starbucks Corporation (NASDAQ: SBUX), Target Corporation (NYSE: TGT), and L Brands, Inc. (NYSE: LB), Capri Holdings Limited (NYSE: CPRI) is one of the best consumer discretionary stocks to buy now.

Avory & Co published its Q4 2020 investor letter and mentioned Capri Holdings Limited (NYSE: CPRI) in it. Here is what the firm has to say about CPRI:

7. L Brands, Inc. (NYSE: LB)

Number of Hedge Fund Holders: 59

L Brands, Inc. (NYSE: LB) is an American fashion retailer, founded in 1963. The company owns some of the famous brands, including Victoria’s Secret, La Senza, Henri Bendel, Bath & Body Works, etc. It is headquartered in Columbus, Ohio. Recently, the company has announced the separation of Victoria’s Secret into an independent company. LB stands seventh on our list of the best consumer discretionary stocks to buy now.

In Q1 2021, L Brands, Inc. (NYSE: LB) reported a net income of $356.7 million, compared with $275.2 million during the same period last year. The EPS beat the consensus by $0.04 at $1.25. The strong numbers are mainly driven by the growth of sales at Victoria’s Secret and Bath & Body Works, both accounting for $1.5 billion and $1.46 billion of the gross revenue, respectively. Due to the strong quarterly results, many investment banks raised their price targets on the LB stock, such as Evercore ISI, B.Riley, RBC Capital, Deutsche Bank, etc. In July, Evercore ISI raised its price target on LB to $100, with an ‘Outperform’ rating. Since the beginning of the year, the LB stock has delivered an 83.7% return to shareholders.

Hedge funds are also turning bullish on L Brands, Inc. (NYSE: LB), as 59 funds have positions in the company as of Q1 2021, up from 52 in the previous quarter. The total value of these stakes is $5.93 billion. Lone Pine Capital is the company’s largest shareholder, with 26.2 million shares, worth $1.62 billion.

Like Nike, Inc. (NYSE: NKE), Comcast Corporation (NASDAQ: CMCSA), Lowe’s Companies, Inc. (NYSE: LOW), The Home Depot, Inc. (NYSE: HD), Starbucks Corporation (NASDAQ: SBUX), and Target Corporation (NYSE: TGT), L Brands, Inc. (NYSE: LB) is one of the best consumer discretionary stocks to buy now.

6. Target Corporation (NYSE: TGT)

Number of Hedge Fund Holders: 60

Target Corporation (NYSE: TGT) is a general retailer that sells a wide range of products, including household essentials, home décor, electronics, kitchen and dining, beauty, personal care, etc. The company has 1,909 stores in the U.S. and owns over 48 brands. TGT stands sixth on our list of the best consumer discretionary stocks to buy now.

In Q1 2021, Target Corporation (NYSE: TGT) generated a revenue of $24.2 billion, up 23.4% year-over-year. The company hit its all-time high EPS of $3.69, beating the market consensus by $1.44. Comparable sales grew by 22.9% in the first quarter whereas comparable digital sales grew by over 50%. Sales of apparel and home grew by 60% and 30%, respectively. Target's board announced a quarterly dividend of $0.90 per share, presenting a 32.9% growth.

In June, Argus raised its price target on the TGT stock to $265, with a ‘Buy’ rating. Morgan Stanley’s analyst, Simeon Gutman, also appreciated TGT and he expects the stock to deliver upside in 2021. In the past year, TGT has delivered a 106.4% return to shareholders.

Of the 866 hedge funds tracked by Insider Monkey, 60 funds have stakes in Target Corporation (NYSE: TGT), worth $4.76 billion. GQG Partners is the largest shareholder of the company, with 3.9 million shares, worth $791.3 million.

Like Nike, Inc. (NYSE: NKE), Comcast Corporation (NASDAQ: CMCSA), Lowe’s Companies, Inc. (NYSE: LOW), The Home Depot, Inc. (NYSE: HD), and Starbucks Corporation (NASDAQ: SBUX), Target Corporation (NYSE: TGT) is one of the best consumer discretionary stocks to buy now.

In its first-quarter investor letter, LRT Capital Management mentioned Target Corporation (NYSE: TGT) and other stocks. Here is what the firm has to say about TGT:

Click to continue reading and see the 5 Best Consumer Discretionary Stocks to Buy Now.

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Disclosure. None. 15 Best Consumer Discretionary Stocks to Buy Now is originally published on Insider Monkey.