Consumer stocks are a rollercoaster ride for the faint-hearted. In a world grappling with inflation and stringent budgets, these stocks often bear the brunt of economic downturns. The consumer discretionary sector, in particular, has borne the highest risk, hovering like a sword of Damocles over investors’ heads. Yet, not all consumer discretionary stocks are cut from the same cloth. Some stand head and shoulders above the rest, steadfast in their earnings growth and ability to weather market storms. These are the stocks that tempt the bold-hearted. And here’s the kicker: we like these stocks too. In this piece, we roll out the red carpet and present our crème de la crème list of consumer discretionary stocks – ripe for the taking.
Autoliv (ALV): On the Fast Lane to Success
Autoliv (NYSE:ALV) is no stranger to safety; it’s their middle name. They specialize in passive safety systems for the automotive industry, including airbag protection and seatbelts. Additionally, they deal in mobility safety solutions for two-wheeler drivers. Recently, Autoliv steered toward raising capital through green bonds to bolster its commitment to climate change. The move struck a chord with the society’s climate change agenda.
ALV’s Q423 financials were a tour de force, recording a whopping 18% year-over-year surge in sales, which amounted to a staggering $2.75 billion. This uptick was spearheaded by a 16% organic sales growth and a marked improvement in their operating margin. Not content with the status quo, their EPS lifted off by 51% to $2.71, while adjusted EPS raced ahead by 105% to $3.74.
Fasten your seatbelt for 2024 – Autoliv anticipates a 5% organic sales lift and a 10.5% adjusted operating margin. Armed with solid market positioning and headway in sustainability, Autoliv is the cream of the crop when it comes to consumer discretionary stocks worth purchasing.
Gentex (GNTX): Surging Ahead in the Race
Gentex (NASDAQ:GNTX) is in the business of manufacturing digital vision, connected cars, dimmable glass, and fire protection products. They play a crucial role in the automotive and aviation industry, offering mirrors with automatic-dimming and non-automatic-dimming features, in addition to fire protection signal devices and smoke alarms. A standout last year was Gentex’s Full Display Mirror® (“FDM”) shipments, which soared by a staggering 45%, giving it a leg up in the automotive segment. Moreover, Gentex has been strategically welding partnerships and acquisitions to bolster their product portfolio, such as their tie-up with Solace Power to craft a next-generation wireless power system and their acquisition of eSight to power up the next generation of electronic eyewear.
GNTX’s Q423 was nothing short of momentous, witnessing a 19% year-over-year surge in net sales, culminating in a record $2.30 billion in sales for FY23, marking a solid 20% growth rate from 2022. Gentex also clocked a growth sprint in effective tax rate and net income, notching up an annual net income surge of 34% year-over-year, totaling a princely $428.4 million.
Peering into the lap of the gods for 2024 and 2025, Gentex paints a rosy picture of sustained revenue growth and expansion in gross margins, setting it up as a compelling consumer discretionary stock choice for growth seekers.
MakeMyTrip Limited (MMYT): Taking Off to New Heights
MakeMyTrip Limited (NASDAQ:MMYT) is an online travel company that mastered the art of India’s online travel space. It operates across three segments: air ticketing, hotel bookings, and bus ticketing. Reflecting a meteoric rise, its latest quarter revenue skyrocketed by 25.6% year-over-year, summing up at an impressive $214.22 million. This growth was widespread across all its business segments, with air ticketing, hotels, and packages, and bus ticketing revenues notching up notable surges of 34.8%, 21.5%, and 23.7% respectively. Adjusted margins for air ticketing and hotels and packages also surged, logging 12.8% and 37.2% year-over-year respectively.
The climax of these performances is the substantial upswing in adjusted operating profit and net profit, hitting a high note at $33.40 million and $38.90 million respectively, translating to a staggering 145.27% surge year-over-year. In an environment marked by turbulence, MakeMyTrip exhibited steely determination and growth, placing it in the vanguard of consumer discretionary stocks ripe for the plucking.
On the date of publication, Rick Orford did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
