3 Discretionary Stocks To Add To Your August 2022 Watchlist

Could These Be the Top Picks in the Consumer Discretionary Stocks for the Latter Half of 2022?

Consumer discretionary stocks encompass businesses in the stock market that deal in non-essential goods and services. These often include items such as clothing, electronics, media, and automobiles. Consumer discretionary stocks tend to be more sensitive to economic shifts compared to other stock types. This is because consumer spending on discretionary items is influenced by economic confidence. In times of economic strength, consumers are more likely to spend on such items, while in weaker economic periods, spending on these items may decrease, causing consumer discretionary stocks to falter. Consequently, these stocks can exhibit greater volatility than others. For example, let’s examine consumer discretionary giants like Nike, Inc. (NYSE: NKE) and Etsy Inc. (NASDAQ: ETSY). NKE stock has seen a decline of over 28% year-to-date, but it has rebounded by over 12% in the past month of trading. In contrast, ETSY has plummeted by more than 44% year-to-date, but it has recovered more than 38% in the last month of trading.

In light of these dynamics, consumer discretionary stocks can offer the potential for higher returns during robust economic conditions. Consequently, they may be appealing to investors who are willing to embrace more risk. If you are considering consumer discretionary stocks, here are three options to monitor this month.

Prominent Consumer Discretionary Stocks to Observe Today:

The Walt Disney Company (NYSE: DIS)

To begin, let’s examine a company that needs no introduction, The Walt Disney Company (DIS). The Walt Disney Company stands as one of the world’s largest entertainment and media conglomerates. It operates across four business segments: parks & resorts, media networks, studio entertainment, and consumer products & interactive media. The company boasts a history of robust financial performance, with its stock price steadily climbing over the past few years.

Earlier this month, The Walt Disney Company reported Q3 earnings that surpassed expectations. In the report, Disney posted earnings of $1.09 per share on revenue of $21.5 billion, exceeding analysts’ consensus estimates for the quarter, which projected earnings of $0.94 per share on revenue of $20.1 billion. Additionally, the company achieved a 26.3% revenue increase compared to the same period the previous year.

Disney’s Chief Executive Officer, Bob Chapek, expressed his satisfaction with the company’s performance in a letter to shareholders, stating, “We had an excellent quarter, with our world-class creative and business teams powering outstanding performance at our domestic theme parks, big increases in live-sports viewership, and significant subscriber growth at our streaming services. With 14.4 million Disney+ subscribers added in the fiscal third quarter, we now have 221 million total subscriptions across our streaming offerings.” As of Wednesday, DIS stock closed at $122.81 per share. Do you believe this is the right time to add DIS stock to your watchlist?

Netflix, Inc. (NASDAQ: NFLX)

Next, let’s delve into the streaming giant Netflix (NFLX). Netflix Inc. is a streaming entertainment company known for its subscription-based streaming service offering online access to a library of films and television series, including in-house productions. Netflix is headquartered in Los Gatos, California, and boasts over 200 million paid memberships spanning 190 countries worldwide. Netflix subscribers have access to a wide range of content, including TV series, documentaries, feature films, and mobile games in various genres and languages.

In July, Netflix reported better-than-expected Q2 2022 earnings results. The company posted earnings per share of $3.20 and generated $7.97 billion in sales for the quarter, surpassing Wall Street consensus estimates, which anticipated earnings of $2.95 per share on sales of $8.03 billion. These figures reflect an 8% year-over-year increase in earnings and a 9% sales growth for the quarter. However, Netflix reported a loss of 970,000 subscribers for the second quarter, which was lower than the expected loss of 2 million subscribers. The company attributed this decline to increased competition and price hikes in the market.

Co-CEO of Netflix, Reed Hastings, highlighted the company’s position of strength, saying, “We’re in a position of strength given our $30 billion-plus in revenue, $6 billion in operating profit last year, growing free cash flow, and a strong balance sheet.” Following this earnings release, NFLX stock rebounded by over 26% in the last month of trading. On Wednesday, NFLX stock closed at $241.15 per share. Given this, do you believe NFLX is a wise investment at this time?

Lululemon Athletica Inc (NASDAQ: LULU)

Finally, let’s explore Lululemon Athletica (LULU). Lululemon Athletica is a Canada-based athletic apparel company that designs, manufactures, and retails athletic apparel, footwear, and accessories for men, women, and children. The company’s products are available through its stores, e-commerce platforms, and third-party retailers. Lululemon Athletica operates over 500 stores across North America, Europe, Asia, Australia, and New Zealand.

Just last month, LULU announced plans to expand its international presence by opening stores in Spain, with the first stores set to launch in September. André Maestrini, Executive Vice President, International, commented, “We’re looking forward to connecting with Spanish guests, through our website and at our first retail stores opening in Madrid and Barcelona. The strength of our model across product innovation, guest experience, community, and culture provides a unique advantage as we introduce lululemon to our newest market.”

As a result, LULU stock has rebounded by more than 15% in the last month, closing Wednesday’s trading day at $329.80 per share. Considering this, do you believe LULU stock is a valuable addition to your portfolio at this time?