Consumer discretionary businesses are levered to the highs and lows of economic cycles. This sensitive demand profile can cause discretionary stocks to plummet when macro uncertainty enters the fray, and over the past six months, the industry has shed 11.9%. This drawdown was especially disappointing since the S&P 500 stood firm.
Investors should tread carefully as many companies in this space are also unpredictable because they lack recurring revenue business models. Taking that into account, here are three consumer stocks we’re swiping left on.
Cable One (CABO)
Market Cap: $764.7 million
Founded in 1986, Cable One (NYSE:CABO) provides high-speed internet, cable television, and telephone services, primarily in smaller markets across the United States.
Why Are We Out on CABO?
- Demand for its offerings was relatively low as its number of residential data subscribers has underwhelmed
- Forecasted revenue decline of 2.7% for the upcoming 12 months implies demand will fall even further
- Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 1.5 percentage points over the next year
Cable One’s stock price of $135.80 implies a valuation ratio of 0.9x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than CABO.
Vail Resorts (MTN)
Market Cap: $5.59 billion
Founded by two Aspen, Colorado ski patrol guides, Vail Resorts (NYSE:MTN) is a mountain resort company offering luxury experiences in over 30 locations across the globe.
Why Are We Hesitant About MTN?
- Muted 1.2% annual revenue growth over the last two years shows its demand lagged behind its consumer discretionary peers
- Demand for its offerings was relatively low as its number of skier visits has underwhelmed
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 3.9%
Vail Resorts is trading at $150.50 per share, or 18.4x forward P/E. Read our free research report to see why you should think twice about including MTN in your portfolio.
ADT (ADT)
Market Cap: $7.00 billion
Founded in 1874 and headquartered in Boca Raton, Florida, ADT (NYSE:ADT) is a provider of security, automation, and smart home solutions, offering comprehensive services for home and business protection.
Why Is ADT Not Exciting?
- Number of customers has disappointed over the past two years, indicating weak demand for its offerings
- Projected sales growth of 4.3% for the next 12 months suggests sluggish demand
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
At $8.50 per share, ADT trades at 9.8x forward P/E. To fully understand why you should be careful with ADT, check out our full research report (it’s free).
Stocks We Like More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.