By their very nature, consumer stocks are the bane of risk-averse investors.
High inflationary environments and tight budgets can heavily impact consumer discretionary companies, leading to performance slumps and higher downside risks. S&P's Global Market Intelligence found that consumer discretionary remained the highest-risk sector at the tail end of 2023, and companies belonging to the sector were some of the most shorted stocks in the market.
However, not all consumer discretionary stocks are made equal. Some remain at the top of the pile, growing their earnings and performing well in different market conditions. Indeed, their resiliency makes them attractive candidates for daring investors who want to buy consumer discretionary stocks. Lucky for you, we are fans of stocks like these, too. In this article, we will look at our top list of consumer discretionary stock earnings winners that you can pick from.
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Autoliv (NYSE:ALV) is a passive safety systems developer and manufacturer for the automotive industry. Its passive safety systems include frontal-impact and side-impact airbag protection, inflator technologies, battery cut-off switches and seatbelts. ALV also offers mobility safety solutions for two-wheeler drivers, which include pedestrian protection, cut-off switches and other safety solutions. Its subsidiaries include Autoliv ASP and Autoliv AB. Autoliv recently raised capital using green bonds to help finance its climate change targets and align with the broader society's climate change agenda.
ALV reported solid Q423 financials, with record sales surging to 18% YoY growth and reaching $2.75 billion. The growth was primarily driven by a 16% organic sales growth and an improvement in operating margin. Its EPS rose by 51% to $2.71, while adjusted EPS grew by 105% to $3.74.
ALV is optimistic about 2024 and expects a 5% organic sales growth and a 10.5% adjusted operating margin by the end of the year. Moreover, the company has a solid market position, continued growth initiatives and progress in its sustainability efforts, making it one of the more attractive consumer discretionary stocks to buy.
Gentex (GNTX)
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Gentex (NASDAQ:GNTX) manufactures digital vision, connected cars, dimmable glass and fire protection products. It offers mirrors with automatic-dimming and non-automatic-dimming features used in the automotive and aviation industry, fire protection signal devices and smoke alarms. Also, its business segments specialize in designing and manufacturing electrochromic technology on mirrors to provide appropriate dimming for headlight glare and other uses.
Notably, Gentex's Full Display Mirror® ("FDM") shipments skyrocketed by 45% last year, increasing its position in the automotive segment. The company has also been making strategic partnerships and acquisitions to help grow its product portfolio. Some of these latest deals are its partnership with Solace Power to create a next-generation wireless power system and its acquisition of eSight to develop the next generation of electronic eyewear further.
GNTX's Q423 ended with net sales increasing 19% from a year ago. That contributed to a record-breaking $2.30 billion sales for FY23, representing a healthy 20% growth rate from 2022. Gentex's effective tax rate and net income also saw favorable growth, with annual net income increasing 34% YoY, reaching $428.4 million.
The company has an optimistic outlook for 2024 and 2025, with forecasts for continued revenue growth and gross margin expansion, making it a strong consumer discretionary stock candidate for growth investors.
MakeMyTrip Limited (MMYT)
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MakeMyTrip Limited (NASDAQ:MMYT) is an online travel company that originated in India and pioneered India's online travel space. Company operations are under three main segments: the air ticketing segment that focuses on booking domestic and international air tickets on its online platform; hotels and packages for its hotel reservations and holiday packages offered online, by phone, and franchise stores; and bus ticketing segment provides a bus transportation ticketing platform online. The company recently acquired a majority stake in Savaari Car Rentals as it plans to enter and transform inter-city travel in India.
MMYT ended its latest quarter with a bang. Revenue ended up 25.6% YoY at $214.22 million. That growth spanned across all its business segments. Notable revenue increases include 34.8% for air ticketing, 21.5% for hotels and packages and 23.7% for bus ticketing. Adjusted margins for air ticketing, hotels and packages also grew to 12.8% and 37.2% YoY, respectively.
That performance also brought substantial growth in adjusted operating profit, which reached $33.40 million. Adjusted net profit also grew to $38.90 million from $15.86 million, a 145.27% increase YoY. Even with a challenging environment, the company showed strong resilience and growth, which makes it one of the top consumer discretionary stocks to buy.
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.
Rick Orford is a Wall Street Journal best-selling author, investor, influencer, and mentor. His work has appeared in the most authoritative publications, including Good Morning America, Washington Post, Yahoo Finance, MSN, Business Insider, NBC, FOX, CBS, and ABC News.
