The performance of consumer discretionary businesses is closely linked to economic cycles. Unfortunately, the industry’s recent performance suggests demand may be slowing as discretionary stocks’ 1.4% return over the past six months has trailed the S&P 500 by 7.7 percentage points.
Investors should tread carefully as many companies in this space are also unpredictable because they lack recurring revenue business models. With that said, here are three consumer stocks best left ignored.
Royal Caribbean (RCL)
Market Cap: $71.8 billion
Established in 1968, Royal Caribbean Cruises (NYSE:RCL) is a global cruise vacation company renowned for its innovative and exciting cruise experiences.
Why Should You Sell RCL?
- Demand for its offerings was relatively low as its number of passenger cruise days has underwhelmed
- Poor free cash flow margin of 9.9% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- ROIC of 6.1% reflects management’s challenges in identifying attractive investment opportunities
At $267.35 per share, Royal Caribbean trades at 14.6x forward P/E. Check out our free in-depth research report to learn more about why RCL doesn’t pass our bar.
Hasbro (HAS)
Market Cap: $12.45 billion
Credited with the creation of toys such as Mr. Potato Head and the Rubik’s Cube, Hasbro (NASDAQ:HAS) is a global entertainment company offering a diverse range of toys, games, and multimedia experiences for children and families.
Why Are We Out on HAS?
- Sales tumbled by 2.5% annually over the last five years, showing consumer trends are working against its favor
- Earnings per share lagged its peers over the last five years as they only grew by 7.4% annually
- ROIC hasn’t moved, making investors question whether its recent investments can increase profitability
Hasbro is trading at $88.20 per share, or 15.1x forward P/E. Read our free research report to see why you should think twice about including HAS in your portfolio.
Acushnet (GOLF)
Market Cap: $5.27 billion
Producer of the acclaimed Titleist Pro V1 golf ball, Acushnet (NYSE:GOLF) is a design and manufacturing company specializing in performance-driven golf products.
Why Do We Avoid GOLF?
- Annual revenue growth of 7.9% over the last five years was below our standards for the consumer discretionary sector
- Low free cash flow margin of 4.8% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Acushnet’s stock price of $90.03 implies a valuation ratio of 2x forward price-to-sales. To fully understand why you should be careful with GOLF, check out our full research report (it’s free).
Stocks We Like More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn't over. Find out which 9 stocks made the cut this week - FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.