Consumer discretionary stocks have faced challenges since the pandemic, with high inflation, rising interest rates, and economic concerns causing consumers to cut back on non-essential spending. This has led to a shift towards spending on travel and experiences rather than goods and products. As a result, investors should review their portfolios to ensure they are not holding onto underperforming consumer discretionary stocks.
Analysts predict that consumer discretionary spending will continue to struggle in the coming months, with sell side analysts lowering profit projections for the S&P 500 consumer discretionary sector. This means that these stocks are likely to continue trailing the market, with some performing worse than others. Three lagging consumer discretionary stocks that investors may want to reconsider are GameStop (GME), Nike (NKE), and another unnamed stock.
Nike has seen its stock price decline by 21% in the past year, while the S&P 500 has reached record highs. The company is facing challenges in international markets, particularly in China where economic conditions have slowed down. While Nike beat Wall Street forecasts in its most recent earnings report, sales in regions outside of North America fell short of expectations. The company has announced cost-cutting measures, including reducing its workforce, but these have not been enough to boost its stock performance.
Overall, investors should be cautious when considering consumer discretionary stocks, as the sector is expected to face continued challenges in the near future. It may be wise to reassess investments in companies like Nike that are struggling to keep up with market trends.