5 Best Consumer Discretionary Stocks To Buy

In this article, we discuss 5 best consumer discretionary stocks to buy. If you want to see more stocks in this selection, check out 13 Best Consumer Discretionary Stocks To Buy. 

5. McDonald’s Corporation (NYSE:MCD)

Number of Hedge Fund Holders: 57

McDonald’s Corporation (NYSE:MCD) operates and franchises McDonald’s restaurants in the United States and internationally. It is one of the best consumer discretionary stocks. McDonald’s Corporation (NYSE:MCD) paid a $1.52 per share quarterly dividend to shareholders on March 15, in line with previous. It is one of the most reliable dividend stocks to invest in, with 46 years of consecutive dividend increases under its belt. 

According to Tigress Financial analyst Ivan Feinseth, McDonald’s Corporation (NYSE:MCD) has further potential for growth and thus the analyst increased his price target on the stock from $320 to $330 while maintaining a Buy rating on March 8. Feinseth believes that McDonald’s “Accelerating the Arches” strategy has been driving the company’s growth and will continue to do so. Tigress Financial also commented on McDonald’s Corporation (NYSE:MCD)’s resilient business model, which has consistently delivered strong performance in all economic cycles. The firm’s price target, in combination with dividends, could lead to a total return of over 25% from current levels.

According to Insider Monkey’s Q4 data, 57 hedge funds were bullish on McDonald’s Corporation (NYSE:MCD), compared to 53 funds in the earlier quarter. Ray Dalio’s Bridgewater Associates is a prominent stakeholder of the company, with 1.5 million shares worth $416 million. 

4. Starbucks Corporation (NASDAQ:SBUX)

Number of Hedge Fund Holders: 61

Starbucks Corporation (NASDAQ:SBUX) functions globally as a roaster, marketer, and seller of specialty coffee. The corporation has three main segments – North America, International, and Channel Development. It is one of the premier consumer discretionary stocks to invest in. In Q1 fiscal 2023, Starbucks Corporation (NASDAQ:SBUX) resumed its share repurchase program, repurchasing 1.9 million shares of common stock worth $191.4 million. Approximately 50.6 million shares remain available for purchase under the current authorization. 

On February 15, ​​BMO Capital analyst Andrew Strelzik raised the firm’s price target on Starbucks Corporation (NASDAQ:SBUX) to $125 from $120 and kept an Outperform rating on the shares. According to BMO’s research, Starbucks Corporation (NASDAQ:SBUX)’s overlap of stores in the U.S. has remained relatively stable, with 2021 seeing near multi-year lows. This has increased confidence that the company will continue to experience strong comparable sales growth in the U.S. and suggests a shift towards more gradual, less competitive U.S. store expansion. In a research note to investors, the analyst stated that BMO remains optimistic about the stock and anticipates that Starbucks Corporation (NASDAQ:SBUX)’s strength in the U.S., along with margin recovery and eventual acceleration in China, will lead to further upside potential.

According to Insider Monkey’s fourth quarter database, 61 hedge funds were long Starbucks Corporation (NASDAQ:SBUX), compared to 54 funds in the prior quarter. Ray Dalio’s Bridgewater Associates is a prominent stakeholder of the company, with 2.6 million shares worth $259 million. 

Polen Global Growth Strategy made the following comment about Starbucks Corporation (NASDAQ:SBUX) in its Q4 2022 investor letter:

“We also liquidated our remaining position in Starbucks Corporation (NASDAQ:SBUX). While the company remains a unique and resilient franchise, China is a very important growth market for the company, and zero-COVID policies have made it challenging for the company to operate in this important market. While we expect China to return to more “normal” operation at some point, any COVID flare-ups, in China or other markets, present a very real headwind to Starbucks’ profitability. L’Oreal, Estée Lauder, and other holdings continue to have meaningful exposure to China, but in each of these cases, our research indicates they’re able to better adapt to these operating challenges and realize the growth opportunity in China through their online businesses. In short, we think there are better risk-reward opportunities.”

3. Expedia Group, Inc. (NASDAQ:EXPE) 

Number of Hedge Fund Holders: 65

Expedia Group, Inc. (NASDAQ:EXPE) operates as an online travel company in the United States and internationally. The company operates through Retail, B2B, and trivago segments. It is one of the best consumer discretionary stocks to invest in. On February 10, Oppenheimer analyst Jed Kelly raised the firm’s price target on Expedia Group, Inc. (NASDAQ:EXPE) to $135 from $120 and kept an Outperform rating on the shares. Despite the fact that Q4 revenue and EBITDA fell short of consensus estimates, this does not reflect the current demand environment, where lodging bookings in January grew by 20% compared to 2019, compared to only 4% in Q4. The analyst noted that the firm believes the market is undervaluing Expedia Group, Inc. (NASDAQ:EXPE)’s unified tech-stack, which is leading to more consistent earnings growth.

According to Insider Monkey’s fourth quarter database, 65 hedge funds were bullish on Expedia Group, Inc. (NASDAQ:EXPE), compared to 76 funds in the prior quarter. PAR Capital Management is the largest stakeholder of the company, with 3.50 million shares worth $306.60 million. 

Here is what Miller Value Partners specifically said about Expedia Group, Inc. (NASDAQ:EXPE) in its Q3 2022 investor letter:

“Expedia Group, Inc. (NASDAQ:EXPE) ($92.69) has a high teens free cash flow yield, trades at 14x 2022 and 10x 2023 earnings. We believe it can sustain earnings per share growth in the mid-teens. It massively improved its business and margins during the pandemic, has repaired its balance sheet and is chaired by an amazing capital allocator, Barry Diller. We think it’s worth more than double the current price.”

2. NIKE, Inc. (NYSE:NKE)

Number of Hedge Fund Holders: 71

NIKE, Inc. (NYSE:NKE) manufactures and distributes athletic footwear, clothing, equipment, and accessories for men, women, and children worldwide. It is one of the best consumer discretionary stocks to invest in. NIKE, Inc. (NYSE:NKE) declared a $0.34 per share quarterly dividend, in line with previous. The dividend is payable on April 3, to shareholders of record on March 6. 

On March 17, according to Randal Konik, an analyst at Jefferies, the digital data panel of the firm indicates that there was a strong interest in sneakers during the holiday season and it has remained high so far this year. As a result, the firm expects NIKE, Inc. (NYSE:NKE) to report Q3 results that surpass expectations and are healthy. The latest data suggests that China is improving and Adidas’ recent weakness could give NIKE, Inc. (NYSE:NKE) an opportunity to gain more market share. Jefferies assigned a Buy rating and a target price of $140 on Nike shares. 

According to Insider Monkey’s fourth quarter database, 71 hedge funds were bullish on NIKE, Inc. (NYSE:NKE), compared to 70 funds in the prior quarter. Terry Smith’s Fundsmith LLP is the largest stakeholder of the company, with 6.7 million shares worth $787 million. 

ClearBridge All Cap Growth Strategy made the following comment about NIKE, Inc. (NYSE:NKE) in its Q4 2022 investor letter:

“NIKE, Inc. (NYSE:NKE) has been pressured by an uneven global recovery that led to surplus inventory. We added to the position earlier in the year with the view that its inventory write-down should not derail the company’s long-term high-single-digit revenue growth or the margin expansion from its enhanced focus on the direct-to-consumer business. While near-term earnings estimates may have some risk, much of the multiple contraction is in the current value of Nike shares and sentiment has shifted, with the shares bouncing 40% higher during the quarter. Netflix is another earnings reset name that has taken decisive actions, developing an ad-supported subscription tier and cracking down on password sharing, that have helped its shares rerate strongly.”

1. Booking Holdings Inc. (NASDAQ:BKNG)

Number of Hedge Fund Holders: 83

Booking Holdings Inc. (NASDAQ:BKNG) provides travel and restaurant online reservation and related services worldwide. On February 23, Booking Holdings Inc. (NASDAQ:BKNG) reported a Q4 non-GAAP EPS of $24.74 and a revenue of $4.05 billion, outperforming Wall Street estimates by $2.66 and $150 million, respectively. Revenue for the period increased nearly 36% on a year-over-year basis. 

On February 27, Shyam Patil, an analyst at Susquehanna, increased the firm’s price target on Booking Holdings Inc. (NASDAQ:BKNG) from $2650 to $2900 and maintained a Positive rating on the shares. The analyst noted that travel demand was robust in the fourth quarter, with the number of room nights exceeding 2019 levels and increasing even further. Furthermore, January trends have indicated further improvement, which has increased optimism about both the first quarter and 2023.

According to Insider Monkey’s fourth quarter database, 83 hedge funds were bullish on Booking Holdings Inc. (NASDAQ:BKNG), compared to 92 funds in the prior quarter. Harris Associates is a prominent stakeholder of the company, with 515,271 shares worth $1 billion. 

Here is what L1 Capital International Fund has to say about Booking Holdings Inc. (NASDAQ:BKNG) in its Q3 2022 investor letter:

“During the December 2022 Quarter over 50% of the Fund’s holdings’ share prices increased by more than 10% in local currency with a number of them increasing by more than 20%. Five companies positively contributed over 0.5% (in AUD) to the Fund’s returns for the quarter. We added to our investment in Booking Holdings Inc. (NASDAQ:BKNG) prior to Q3 2022 results due to the share price overly discounting concerns about near term travel activity. Booking’s quarterly results were a standout, with the recovery in the travel industry following COVID-19 disruptions running well ahead of our expectations. Booking’s share price subsequently increased 23% in the December 2022 Quarter and has increased a further 14% so far in 2023 (in USD).”

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