The Consumer Discretionary sector, as measured by the S&P 500 Consumer Discretionary Sector performance, surged approximately 30% in 2024, outperforming the broader market by around 6%. This sector represents a vibrant and high-growth segment of the market, driven by consumer spending behaviour, economic cycles, and product innovation. It encompasses industries such as retail, automobiles, travel & leisure, e-commerce, luxury goods, and home improvement—each benefiting from rising disposable incomes, evolving consumer lifestyles, and technological advancements.
Historically, consumer stocks have performed exceptionally well during bull markets, making them a compelling choice for growth-oriented portfolios. With GDP growth and labour market strength fuelling consumer confidence, the sector remains well-positioned to capitalize on economic expansion and increasing global wealth.
A Long-Term Growth Driver: The Rise of EVs
The rapid expansion of the electric vehicle (EV) market has emerged as a major catalyst within the Consumer Discretionary sector. As global automakers accelerate their transition toward electrification, many companies and traditional manufacturers investing in EVs have seen substantial capital inflows. Beyond revolutionizing the automotive industry, the shift to EVs is also driving demand across other adjacent sectors, including battery technology, renewable energy, and smart mobility solutions.
Christopher Tsai, President and Chief Investment Officer of Tsai Capital, highlighted the transformative outlook for EVs in his Q4 2024 investor letter, stating:
“EVs are so much more efficient than gas-powered cars, their adoption will likely follow the same exponential growth trajectory that defines nearly all disruptive technologies. Just as the spinning wheel, steam engine, automobile, cable television, and streaming services were swiftly embraced despite early skepticism, the path toward widespread EV adoption seems clear.”
Where to Find Value?
According to Jordan Michaels, Fidelity Sector Portfolio Manager for Consumer Discretionary, the sector’s performance in 2025 is expected to be influenced by macroeconomic factors, particularly the health of the job market. The trajectory of these stocks will largely depend on the resilience of U.S. consumers and broader economic conditions. If economic growth remains steady and employment remains strong, consumer spending is likely to persist. Furthermore, anticipated interest rate cuts from the Federal Reserve could ease financial pressures, unlocking more cash or credit for delayed big-ticket purchases in home improvement and auto-related categories.
Jordan further emphasized investment opportunities within the sector, noting:
“With the evolving business cycle in mind, interest-rate-sensitive industries, such as auto- and home-related categories, look interesting. Not only have these groups recently sported attractive valuations, but they have tended to lead the market’s advance amid the first signs of lower interest rates because they typically benefit from increased borrowing.”
With these insights in mind, let’s explore the 12 best consumer discretionary stocks to buy according to analysts.
Aerial view of a shopping mall bustling with consumers.
Our Methodology
To determine the 12 best consumer discretionary stocks to buy, we first compiled a list of U.S.-listed companies in the sector with strong fundamentals and a market capitalization of at least $2 billion. We then ranked them based on their potential upside, with the stock offering the highest upside placed at the top. Additionally, we included the number of hedge funds holding stakes in these companies as of Q3 2024.
Note: All pricing data is as of market close on February 12.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
12 Best Consumer Discretionary Stocks to Buy According to Analysts
12. Patrick Industries Inc. (NASDAQ:PATK)
Upside Potential: 20%
Number of Hedge Fund Holders: 24
Patrick Industries Inc. (NASDAQ:PATK) is a manufacturer and distributor of building and construction materials, primarily serving the recreational vehicle (RV), marine, and manufactured housing industries. The company offers a diverse range of products, including decorative surfaces, cabinetry, and other components essential for the construction and renovation of these vehicles and homes.
On February 6, Patrick Industries Inc. (NASDAQ:PATK) reported strong Q4 2024 results, leading to several price target upgrades from analysts. Analysts from KayBanc, BMO Capital, and Raymond James increased their price objectives by 4% to 12%. On February 10, an analyst from Truist also raised the price target to $120 from $115 and maintained his Buy rating. The analyst believes that after a challenging three years, the RV industry may be recovering, as dealer conversations indicate demand and earnings are rebounding. The analyst was optimistic, expecting stronger margins, better cash flow, and improved restocking trends. This suggests that current street estimates for FY 2025 and FY 2026 might be too low, potentially indicating more upside ahead.
11. Coupang Inc. (NYSE:CPNG)
Upside Potential: 27%
Number of Hedge Fund Holders: 56
Coupang Inc. (NYSE:CPNG) is an e-commerce marketplace and the largest online retailer in South Korea. The company’s Rocket Delivery network provides same-day or next-day delivery. In addition, the company offers Rocket Fresh, which delivers fresh groceries; Coupang Eats, a restaurant ordering and delivery service; and Coupang Play, an online content streaming service, as well as advertising products.
The investment management firm Baron Funds highlighted Coupang Inc. (NYSE:CPNG)’s strength in e-commerce businesses globally in its “Baron Global Advantage Fund” investor letter for Q3 2024, stating:
“Shares of Coupang, Korea’s largest e-commerce marketplace, appreciated 17.2% after second quarter results saw a solid EBITDA beat, driven by higher margins in its core Product Commerce segment (EBITDA of $530 million, up 30% year-on-year, and margins of 8.2%, up 110 bps year-on-year). We believe the trend in margin expansion will continue as Coupang scales margin-accretive offerings, improves operations and supply chain, and leverages technology and automation to drive efficiencies.
Its food delivery business has experienced strong growth with overall developing offerings revenues up 188% year-on-year in constant currency, with improving unit economics in the recent quarters. We view Coupang as one of the most competitively advantaged e-commerce businesses globally, with significant runway for both revenue and earnings growth.”
Coupang Inc. (NYSE:CPNG) is actively working on retaining and expanding its customer base as key drivers for its long-term growth strategy. The company is focusing on deepening engagement through the expansion of its offerings, both in established categories and newer ventures. Its relatively recent businesses, such as Eats, Taiwan, Play, and Farfetch, have already started contributing to earnings, and their impact is expected to grow significantly in the coming years, thereby supporting overall earnings growth.
On February 13, Barclays raised its price target on Coupang Inc. (NYSE:CPNG) to $34 from the previous $32 while maintaining an Overweight rating. The analyst notes that the company’s recent entry into Japan’s food delivery market is noteworthy and could significantly influence its future market positioning and investment guidance for 2025.
