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.
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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.
10. Meritage Homes Corp. (NYSE:MTH)
Upside Potential: 37%
Number of Hedge Fund Holders: 35
Meritage Homes Corp. (NYSE:MTH) is a designer and builder of single-family attached and detached homes. The company primarily operates in historically high-growth regions of the United States, offering a variety of entry-level and first move-up homes. Additionally, they run a financial services business that provides title and escrow, mortgage, and insurance services.
ClearBridge Investments, an investment management company, disclosed Meritage Homes Corp. (NYSE:MTH) as its largest new position during Q3 2024 in its “ClearBridge Small Cap Strategy” investor letter. They stated:
“Our largest new position during the quarter was Meritage Homes, in the consumer discretionary sector, which builds single family attached and detached homes in the western and southeastern U.S. While higher mortgage rates have weighed on homebuilders and the demand for housing, we continue to believe that there is a systematic shortage of housing in the U.S., and that a decline in interest rates and subsequent mortgage rates should prove a boon to homebuilders. Beyond broader sector tailwinds, we opted to move our capital from Century Communities to Meritage given the latter’s higher historical level of returns at a comparable current valuation.”
On January 31, 2025, Evercore ISI reiterated its Buy rating for Meritage Homes Corp. (NYSE:MTH). In early February, Keefe Bruyette analyst maintained a Market Perform rating but lowered the price target to $90 from $97, citing a challenging environment for homebuilding. Despite this, the price target still reflects a healthy 22% upside.
Meritage Homes Corp. (NYSE:MTH) reported steady results on January 29. Home closings (deliveries to homeowners) increased by 2% year-over-year to 4,044 units. However, home closing revenue declined by 3% due to slightly weaker average sales prices. Despite softer demand, the company managed to secure orders totaling 3,304 homes. Overall, the results were steady, and the company continues to benefit from favorable demographics, an undersupply of affordable homes, and job market stability. Meritage Homes’ geographic diversity and strong local market positions have supported its business model through various market cycles and should enable it to withstand medium-term volatility.
9. BorgWarner Inc. (NYSE:BWA)
Upside Potential: 39%
Number of Hedge Fund Holders: 27
BorgWarner Inc. (NYSE:BWA) provides clean and efficient technology solutions for combustion, hybrid, and electric vehicles. The company’s products enhance vehicle performance, propulsion efficiency, stability, and air quality. It manufactures and sells these products globally, primarily to original equipment manufacturers (OEMs) of light vehicles, including passenger cars, sport-utility vehicles, vans, and light trucks.
BorgWarner Inc. (NYSE:BWA)’s strategy focuses on expanding its product portfolio through organic investments and technology-focused acquisitions. The company’s balanced portfolio is particularly crucial as the automotive industry experiences volatility in electric vehicle adoption across different regions. It reported steady Q4 2024 results, although they were slightly below street expectations. Q4 sales declined by 2.4% to $3.4 billion, but the adjusted operating margin was 10.2%, which was at the upper end of its guidance. For FY 2025, the company forecasted net sales to be between $13.4 billion and $14.0 billion, indicating an expected decline in sales next year. However, it anticipates maintaining an operating margin similar to 2024. Overall, the performance remained healthy given the lackluster market conditions.
Most analysts on the street, including Wells Fargo, JP Morgan, and Evercore ISI, have maintained their Buy rating on BorgWarner Inc. (NYSE:BWA) in their recent updates. On February 11, Barclays analyst also reiterated his Buy rating but marginally lowered the price target to $42 from $43. He believes the company’s guidance for 2025 was a necessary reset of expectations and anticipates continued margin outperformance from BorgWarner Inc. (NYSE:BWA).
8. Wynn Resorts Ltd. (NASDAQ:WYNN)
Upside Potential: 42%
Number of Hedge Fund Holders: 52
Wynn Resorts Ltd. (NASDAQ:WYNN) is an international developer and operator of luxury hotels and casinos. The company manages renowned properties including Wynn Las Vegas, Wynn Macau, and Encore Boston Harbor, providing top-tier accommodations, gourmet dining, gaming facilities, retail spaces, and world-class entertainment. Wynn Resorts Ltd. (NASDAQ:WYNN) is recognized for its dedication to delivering exceptional guest experiences and maintains a significant presence in the gaming and hospitality sectors.
On February 6, 2025, Wynn Resorts Ltd. (NASDAQ:WYNN) announced the securing of a $2.4 billion construction loan to finance the development of Wynn Al Marjan Island, the first integrated resort in the United Arab Emirates. This financing, noted as the largest hospitality loan in UAE history, was facilitated by a global syndicate of lenders and features a seven-year term at a competitive market interest rate. The resort’s construction is advancing swiftly, with 64% of the structural concrete completed up to the 34th floor of the main resort tower. Located in Ras Al Khaimah, the resort is slated to open in 2027, offering 1,542 rooms, dining and nightlife venues, a luxury shopping promenade, and other amenities. Strategically positioned to capitalize on the recovery of the travel and tourism industry, Wynn Resorts Ltd. (NASDAQ:WYNN) is also focusing on new offerings anticipated to drive higher footfalls and spending.
Analysts have remained broadly positive on Wynn Resorts Ltd. (NASDAQ:WYNN) following its Q4 results reported on February 14. Analysts from Wells Fargo and Mizuho Securities reiterated their Buy ratings, while Deutsche Bank, Barclays, and Stifel Nicolaus raised their price targets and maintained their Buy/Overweight ratings. Stifel analyst noted that although Wynn Resorts Ltd. (NASDAQ:WYNN)’s results and outlook may not be as strong as those of one of its competitors, they were still close and should positively support valuation.
7. M/I Homes Inc. (NYSE:MHO)
Upside Potential: 51%
Number of Hedge Fund Holders: 29
M/I Homes Inc. (NYSE:MHO) is a prominent builder of single-family homes in the United States, primarily focusing on high-growth markets. The company offers a diverse range of home designs and customization options to meet the needs of a broad segment of the housing market, including first-time buyers, move-up buyers, luxury home buyers, and empty nesters.
On January 29, M/I Homes Inc. (NYSE:MHO) reported its Q4 and FY 2024 results. In Q4, the company delivered 2,402 homes, a 19% increase from the same period in 2023, resulting in a 24% rise in revenue to $1.2 billion. Pre-tax income grew by 24% to $171 million, while net income increased by 27%, reaching $133.5 million (or EPS of $4.71). For the full year, the company delivered 9,055 homes, generating $4.5 billion in revenue. In 2024, new contracts totalled 8,584, an 8% increase from 7,977 new contracts in 2023 (new contracts are agreements for the purchase of new homes that the company will build). M/I Homes Inc. (NYSE:MHO) CEO Robert H. Schottenstein highlighted the company’s strong performance and expressed optimism for 2025, citing favourable industry fundamentals such as strong demographic trends and a housing undersupply.
On January 30, Raymond James analyst maintained his Strong Buy rating on M/I Homes Inc. (NYSE:MHO) although with a lowered price target of $168 versus $210 earlier. According to him, M/I Homes presents one of the most compelling risk/reward profiles in the homebuilding sector given his estimate that the company would generate a high-teens return on invested capital (ROIC) with a net debt-free balance sheet. He views M/I Homes Inc. (NYSE:MHO) as attractively valued, even considering the expected margin pressure from higher mortgage rates throughout FY 2025.
6. Under Armour Inc. (NYSE:UA)
Upside Potential: 51%
Number of Hedge Fund Holders: 28
Under Armour Inc. (NYSE:UA) is a sports apparel, accessories and footwear company known for its innovative performance products. The brand focuses on providing high-quality athletic gear designed to enhance performance and comfort for athletes and fitness enthusiasts.
On February 6, 2025, Under Armour Inc. (NYSE:UA) reported better-than-expected Q3 2025 results (FY ending March 2025) with revenue of $1.4 billion (-6% YoY). Revenue was better than street expectations but still was in decline because of weakness in both North American and International markets, partially balanced by 5% rise in revenue in Europe, Middle East, and Africa (EMEA). While Apparel and Footwear revenue declined 5% and 9%, respectively, Accessories posted a 6% growth. Encouragingly, the company was able to expand its gross margin by 240 basis point to 47.5%, which helped it report an adjusted EPS of $0.08. Under Armour Inc. (NYSE:UA) raised its fiscal 2025 outlook, now anticipating a revenue decline of approximately 10%, an improvement from the previously expected decline of low double-digit percentage. The company also projects a gross margin increase of about 160 basis points, up from the prior estimate of 125-150 basis points. Overall, the results are a testimony to positive impact from its turnaround strategy through which it plans to reduce costs and solidify its brand strength in the long-term.
On February 7, a UBS analyst reiterated his Buy rating on Under Armour Inc. (NYSE:UA) with an unchanged price target of $15. The analyst believes the company is successfully revamping its operations, as evidenced by their third-quarter performance showing positive trends. He is optimistic about the company’s transformation initiatives, innovation platform, and effective cost management strategies. He also expects Under Armour Inc. (NYSE:UA)’s growth to potentially surprise the market, leading to improved market sentiment from current low levels.
5. Modine Manufacturing Company (NYSE:MOD)
Upside Potential: 54%
Number of Hedge Fund Holders: 32
Modine Manufacturing Company (NYSE:MOD) specializes in thermal management and energy-efficient solutions. The company designs and produces a variety of products, including heat exchangers, radiators, and HVAC systems, catering to automotive, industrial, and commercial markets. For the vehicle manufacturers (OEMs), the company makes high-quality heating and cooling systems for vehicles used on roads and off-road.
Fred Alger Management, an investment management firm with holdings in Modine Manufacturing Company (NYSE:MOD), released its “Alger Small Cap Growth Fund” investor letter for Q4 2024. The firm recognized Modine Manufacturing Company (NYSE:MOD) as having good catalysts and made the following remarks about the company:
“In our view, Modine remains in the midst of a significant transformation, with increasing recognition in the high-growth data center cooling market, where it is positioned as a strong competitor and potential market share gainer.”
Modine Manufacturing Company (NYSE:MOD) reported its Q3 2025 (FY ending March 2025) results amid tough market conditions, but still they were better than street expectations. It reported revenue headwinds in the quarter given the extended seasonal shutdowns, combined with softness in its auto, commercial vehicle, agriculture and construction equipment markets. That said, its data center revenue surged 176% in the quarter due to strong growth from the Scott Springfield Manufacturing (SSM) acquisition and organic growth driven by North America colocation customers. Despite the headwinds, the company reiterated its guidance for FY 2025. Its long-term outlook is supported by its strategy to transition the portfolio mix to higher margin and growth businesses. It is actively optimizing its business portfolio which should lower costs and improve earnings in coming years. On February 5, D.A. Davidson analyst reiterated his Buy rating on Modine Manufacturing Company (NYSE:MOD) with a price target of $155.
4. Sweetgreen Inc. (NYSE:SG)
Upside Potential: 60%
Number of Hedge Fund Holders: 25
Sweetgreen Inc. (NYSE:SG) is a fast-casual restaurant chain that focuses on serving healthy, made-to-order salads and bowls using fresh, locally sourced ingredients. The company emphasizes sustainability and transparency in its supply chain, appealing to health-conscious consumers. The company is well-positioned to capitalize on the growing trend of health and wellness among consumers, particularly in the fast-casual dining segment.
Citi analyst upgraded Sweetgreen Inc. (NYSE:SG) to Buy on January 10, 2025, raising the price target to $49 from $44 earlier based on optimism around the company’s Infinite Kitchen (IK) expansion and store remodels. His analysis projected store profit growth in the mid-teens by 2029 and nearly 50% upside in DCF valuations, with expectations that management’s strategic pricing initiatives could reshape market perception by 2025. However, on February 12, the analyst revised his outlook, cutting the price target to $43 while he maintained the Buy rating. The downgrade reflects concerns over weaker-than-expected same-store sales (SSS) in Q4 and early Q1 and the concerns were attributed to factors like holiday shifts, winter storms, and wildfires. Analysts cautioned that if Sweetgreen Inc. (NYSE:SG) provides conservative full-year guidance, it could lead to stock volatility, given the company’s high valuation. While long-term optimism remains, near-term headwinds have tempered some expectations.
3. VinFast Auto Ltd. (NASDAQ:VFS)
Upside Potential: 60%
Number of Hedge Fund Holders: 5
VinFast Auto Ltd. (NASDAQ:VFS) positions itself as an emerging pure-play electric vehicle (EV) manufacturer. The company designs and produces a range of EVs, including electric cars, scooters (e-scooters), and buses (e-buses). It offers an e-mobility ecosystem focused on customers, community, and connectivity, alongside new vehicle rollouts. Headquartered in Hai Phong City, Vietnam, VinFast is recognized as Vietnam’s first global automotive manufacturer.
VinFast Auto Ltd. (NASDAQ:VFS) delivered 53,139 electric vehicles globally in fourth quarter 2024, reflecting a 143% increase over the last quarter. For the full year, the company exceeded its guidance and delivered 97,399 vehicles (+192% YoY) and expects to at least double its global deliveries for the full year 2025. In its February 2025 corporate presentation, the company outlined its strategy for international market expansion. It boasts of a highly automated manufacturing design, enabling scalable growth. VinFast Auto Ltd. (NASDAQ:VFS) has an aggressive expansion plan – from its effective annual designed capacity of 300,000 units, VinFast plans to expand to more than double the capacity by 2025 and further to 850,000 units by 2028.
The majority of this scale-up before 2025 is expected from India, Indonesia, and Vietnam, while between 2025 and 2028, capacity expansion will primarily come from North America. VinFast Auto Ltd. (NASDAQ:VFS) is also expanding its global distribution network and strategically targeting new high-growth markets in Europe, Asia, the Middle East and Africa. The company has ample liquidity to fund its expansion plans in addition to the $3.6 billion of free grants and loans it is expecting from its founder and parent company.
2. PVH Corp. (NYSE:PVH)
Upside Potential: 66%
Number of Hedge Fund Holders: 27
PVH Corp. (NYSE:PVH) is a global apparel company that owns and manages a diverse portfolio of brands, including Calvin Klein and Tommy Hilfiger. The company designs, markets, and sells a broad range of apparel, accessories, and footwear through various distribution channels. PVH has a significant international presence, with 70% of its revenue generated outside the U.S.
The majority of PVH Corp. (NYSE:PVH)’s revenue comes from Calvin Klein and Tommy Hilfiger, with only 10% coming from Heritage Brands, parts of which have already been divested. The company continued to face revenue growth challenges in Q3 2024 (reported in early December), with revenue declining by 5% to $2.3 billion, though this was better than the company’s guidance of a 6%-7% decrease. The execution of the company’s PVH+ Plan, initiated during Investor Day 2022, remains central to its growth strategy. PVH+ is a multi-year strategic plan aimed at transforming Calvin Klein and TOMMY HILFIGER into the most desirable lifestyle brands globally and positioning PVH Corp. (NYSE:PVH) as one of the highest-performing brand groups in the industry. Market would become more positive when this plan helps improve earnings through effective cost management and strategic initiatives. In their reports in first week of February, Barclays and Evercore ISI analysts reiterated their Buy rating with price targets of $98 and $139, respectively.
During the results call, CEO Stefan Larsson discussed the progress made on PVH+ plan:
“We are building systematic and repeatable progress across the business, where we increasingly connect product strength, consumer engagement, and marketplace execution to our data and demand-driven operating model. In North America we continue to deliver strong profitability, in Europe, we are gaining great traction with our quality of sales initiative which led to increased sell-throughs and sequentially improved wholesale orders, and in Asia Pacific, we are delivering on our plan and drove growth across all channels. Looking ahead, we are focused on driving next level execution of the PVH+ Plan to build our brands for sustainable, profitable growth.”
1. Abercrombie & Fitch Co. (NYSE:ANF)
Upside Potential: 75%
Number of Hedge Fund Holders: 51
Abercrombie & Fitch Co. (NYSE:ANF) is a global, multi-brand, digitally-led omnichannel retailer. The company offers a wide range of apparel, personal care products, and accessories for men, women, and kids. These products are primarily sold through its company-owned stores and digital channels, as well as through various third-party arrangements. The company’s brands include Abercrombie & Fitch, Abercrombie kids, Hollister, and Gilly Hicks.
Carillon Tower Advisers, an investment management company, highlighted Abercrombie & Fitch Co. (NYSE:ANF)’s weaker performance in its “Carillon Eagle Small Cap Growth Fund” Q3 2024 investor letter. Despite this, the firm remains optimistic around the valuation and continues to hold a stake as of December 2024. The firm noted:
“The stock lagged during the period despite reporting strong quarterly results and lifting forward guidance. We believe the performance is more a result of elevated investor expectations than any weakening of the underlying fundamentals, which we believe continue to remain strong.”
On January 13, the company provided a Q4 business update. It raised the Q4 2024 net sales growth outlook to a range of 7%-8% from the previous range of 5%-7%, and revised the FY 2024 sales growth forecast to 15%, up from the earlier 14%-15%, while maintaining its operating margin outlook. Despite Abercrombie & Fitch Co. (NYSE:ANF) shares dropping 16% that day, a Jefferies analyst reiterated his Buy rating and $220 price target, viewing the pullback as a buying opportunity. He believes the company’s plan for operating income and EPS to grow faster than sales is credible based on his analysis. Therefore, he remains positive on the stock.
While we acknowledge the potential of ANF to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ANF but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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