3 Best Consumer Discretionary Stocks to Buy Before the Holiday Season

Changing customer needs, growing personal spending, and a desire for high-end fashion and products contribute to the steady expansion of the consumer discretionary sector while expanding its business lines.

Against this backdrop, investors may want to make an investment in good consumer discretionary stocks Amazon.com, Inc. (AMZN), Ross Stores, Inc. (ROST), and Crocs, Inc. (CROX) before the holiday season.

The consumer discretionary market, including such as non-essential product or goods and household wares that people do not need or require every day but still buy for that reason, such as luxury fashion, et cetera comprise is the most major beneficiary of economic recovery and growth with disposable income. Personal consumption expenditure accounts for around 68% of the nation’s GDP in 2024 with a healthy job market, minimal unemployment, and rising wages.

In addition, internet penetration has had a multiplier effect on the growth of online shopping and the e-commerce market in the U.S. With more than 33% of world population online, e-commerce has grown into a $6 trillion industry and is estimated to reach $8 trillion by 2027. On the global scale, US retail e-commerce sales came in at $579.45 billion for the first half of 2024.

The US e-commerce sales were $291.60 billion in the second quarter, meaning up by 0.82% from the earlier quarter and 6.8% up from last year.

This would make the luxury fashion market grow, fueled by the upsurge in disposable income and shifting consumer preferences. Based on an IMARC Group report, the market shall reach $327.10 billion by 2032, growing at a CAGR of 3.1%. Factors for the growth in the market include rising affluent consumers, rising exclusivity aspiration, and a rise in influence of social media and digital platforms.

Provided such favorable market circumstances, we can view the major consumer discretionary stocks like AMZN, ROST, and CROX with greater detail as far as fundamentals are concerned.

Amazon.com, Inc. (AMZN)

2024 STOCK MARKET OUTLOOK

AMZN sells consumer products, advertising, and subscription services through online and physical stores internationally, being engaged in retail. The company operates in three segments: North America; International; and Amazon Web Services (AWS).

September 5, AMZN : Amazon Web Services, Inc. (AWS), the leading cloud computing company, today announced that the Central Japan Railway Company, or JR Central, which operates high-speed railway services, has selected AWS technologies to take its operations on its Yamanashi Maglev Line to the next level.

aws enable JR Central to create highly advanced data-driven operations and maximizes operational efficiency while lowering maintenance expenses.

For its second quarter that ended June 30, 2024, AMZN reported its total net sales to rise 10.1% year-over-year to $147.98 billion. Its operating income rose 91% from the year-ago value to $14.67 billion. Net income and EPS came in at $13.48 billion and $1.26. Both net income and EPS would improve 99.8% and 93.8% over the prior year’s quarter.

Street projections of AMZN for its third quarter, which closed on 30 Sep. 2024, are likely going to raise revenue by 9.9% to $157.18 billion and EPS by 20.6% to $1.13 compared to last year. The company also comfortably beat the EPS estimates in each of its last four trailing quarters.
AMZN’s shares rose 12.3% over the last month and 32.4% over the last year closing the last trading session at $187.

Bright prospects in AMZN shine through in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated based on 118 different factors, each weighted to an optimal degree.

The stock has an A rating for Sentiment. It also carries a B rating for Momentum and Quality. AMZN ranks #14 among 53 stocks in the B-rated Internet industry.

Ross Stores, Inc. (ROST)
ROST operates off-price retail apparel and home fashion stores under the Ross Dress for Less and dd’s DISCOUNTS brands. The company’s stores primarily sell apparel, accessories, footwear, and home fashions.
On August 21, ROST’s Board of Directors declared a quarterly cash dividend of $0.37 per common share, payable on September 30, 2024, to stockholders of record as of September 10, 2024.

A payback of $1.47 yearly, ROST yields 0.96% using the current share price, and for the past four years, the average yield is 0.94%. Three-year CAGR on dividend payouts is 18.9%.

On July 22, ROST announced the company had opened 21 Ross Dress for Less® and 3 dd’s DISCOUNTS® stores across 17 different states during June and July. These new locations are part of a plan to add 90 new stores during fiscal 2024.

In ROST’s revenue stream, sales were up 7.1% for the second quarter ending August 3, 2024, at $5.29 billion above last year’s quarter. Net earnings and EPS generated stood at $527.15 million and $1.59, respectively. Quarterly results were above last year’s quarter by 18.1% and 20.5%.
Total assets for the company as on August 3, 2024, stand at $14.68 billion against the amount on July 29, 2023, of $13.99 billion.

Street is looking for ROST’s EPS in the third quarter (ended October 2024) to grow by 6.6% year over year to $1.42. The street is expecting revenues to be up 5.2% year over year to $5.18 billion. In addition, the company has achieved top-quarter revenue and EPS consensus in all four trailing quarters.

ROST’s shares have surged 7.5% over the past month and 28.9% over the past year to close the last trading session at $152.68.

POWR Ratings for ROST Reflect Its Excellent Prospects. ROST has an overall rating of B, which translates to a Buy in our proprietary rating system.

ROST has a B rating in Sentiment, Momentum, and Quality. It is ranked #18 in Fashion & Luxury among the 58 stocks in the B-rated Industry.
Apart from the ratings mentioned above for POWR, we also have the other ratings of ROST for Growth, Stability, and Value. Get all ratings for ROST here.
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CROX designs, develops, manufactures, markets, distributes, and sells footwear and accessories for men, women, and children under the Crocs and HEYDUDE brands internationally. The company provides wide footwear products, like clogs, sandals, slides, flips, wedges, platforms, socks, boots, charms, flip-flops, sneakers, and slippers.
In addition, CROX’ tr 12 months EBIT margin and net income margin of 26.36% and 20.02% stand at 234.6% and 342.7% higher than the average figures across the industry of 7.88% and 4.52%, respectively, while the stock enjoys an above-industry average in its trailing-12 months gross profit margin 57.11% against 37.16%.

CROX’s revenues for the second quarter ending June 30, 2024 came in at $1.11 billion, representing an increase of 3.6% from the prior year’s corresponding quarter. On the other hand, its non-GAAP gross profit reached $681.92 million, or up 9.5% year-over-year. Its income from operations of $325.74 million improved 2.3% from the comparable quarter of the prior year.
Its non-GAAP net income of $243.64 million and $4.01 per common share are up 8.4% and 11.7% year-over-year, respectively.

It reports CROX is expected to grow 3% to 5% year over year in Crocs Brand, while its adjusted earnings per share is expected to be between $2.95 and $3.10.

Also for 2024, revenues are expected to grow 3% to 5% over 2023 with revenues of the Crocs Brand is up 7% to 9%. Updating the adjusted EPS the company has given new guidance of $12.45 – $12.90 versus the prior view of $12.25 – $12.73.

Revenue and EPS are also projected to increase 6.9% and 5.1% YoY for the fourth quarter that ended in December 2024 to $1.03 billion and $2.71, respectively. The company has been topping the consensus estimate of EPS and revenue every single quarter for the last quarter, which is a good trend.

CROX shares have risen 1.7% over the past six months and 39.1% over the past year as the stock closed its last trading session at $127.73.

Sound principles propel CROX’s POWR Ratings. The company has an overall rating of B, which corresponds to a Buy in our rating system.

CROX has a Quality grade of B and a Sentiment grade of B. It ranks number #11 of 58 stocks in the B-rated Fashion & Luxury industry.

Besides the above-mentioned POWR Ratings, we have CROX ratings on Momentum, Value, Growth, and Stability. Find all CROX ratings here.

What To Do Next?

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Shares of AMZN closed down by $0.31 (-0.17%) at $186.69 on Friday afternoon. Year to date, AMZN has gained 22.87% versus the 19.02% increase in its peer benchmark the S&P 500 for the same period.