Best Consumer Services Stocks for 2024: Investing in Consumer Services

Review and Analysis

Overview

As consumers our buying is usually made of essential goods and services that we always buy because we need them and luxury goods and services, those “nice to have” perks that we only grab when we have extra disposable income to spend. The products and services included in the second category are classed under the consumer discretionary sector and in contrast to the consumer staples companies, the companies in the discretionary sector perform better during times of high economic growth, when people, in general, have more money to spend and are affected during recession times or times of crisis, such as the current pandemic. This is an interesting part of the stocks market and it is overviewed below so that interested investors may give it the attention it deserves when making their stock investment decisions.

Investing in Retail Stocks

Though many investors decide to buy retail stocks of the firms where they like to shop because they can afford to own a piece of those vendors, this is a very bad method to choose which retail stocks to buy, since offering a good shopping experience that you like, doesn’t necessarily make a retailer worthy of a spot in your investment portfolio.

The situation in the retail stock sector was greatly affected by the COVID-19 pandemic as this forced many brick and mortar retailers to either remain closed due to lockdowns or modify their operations and shift to e-commerce services. The pandemic has also crashed the demand for certain types of products while leading others to boom as consumer habits and needs to be changed during the crisis. With the gradual re-opening of economies around the world, the retail sector has gradually started its re-adjustment and it remains to be seen whether the pandemic will leave some permanent shifts and changes behind it.

Even against this complicated and uncertain backdrop, however, retail stocks include many top performers that merit a position in your investment portfolio. Below we shall be highlighting some of those, while also discussing how to effectively discern in which retail stocks you should be investing.

Top consumer discretionary stocks

Several consumer discretionary companies stand out as being among the best in the business. Here are some prime examples:

• Athletic apparel and footwear: Nike (NYSE:NKE)
• Coffeehouse chain: Starbucks (NASDAQ:SBUX)
• Restaurant chain: McDonald's (NYSE:MCD)

What are consumer discretionary stocks?

As consumers have different and differing desires, the consumer discretionary stocks, i.e. the stocks of companies that sell “luxury” “nice to have” “non-essential” goods and services come from several different backgrounds and fields of economic activity. Examples of businesses classed under the discretionary stocks sector include:

• Manufacturers of vehicles such as cars, trucks, and motorcycles and the makers of parts and equipment for such vehicles
• Homebuilders and construction companies of luxury real estate
• Makers of furniture, appliances, housewares, and other home furnishings
• Manufacturers of various consumer electronics
• Apparel and luxury goods and accessories companies
• Retailers of various kinds, including department stores, home-improvement retailers, computer and electronics retailers, home furnishings sellers, and specialty retailers
• Direct-to-consumer retailers that sell goods through catalogs, via mail, or via e-commerce
• Hotel, resort, and casino operators
• Restaurant companies
• Cruise operators
• Providers of consumer services, including education

How to pick a good retail stock

In order to discern which retail stocks constitute good investment choices, interested investors should carefully study several key aspects of the retail business and take into account the performance of retail companies in reference to the following metrics:

Sales growth

The best retail companies are those which manage to grow their revenue obtained by the sale of their products or services in a consistent manner. In general, a good retailer to invest in is one that achieves a big percentage change in their total sales from year to year. Retailers may increase their sales by selling more at existing stores and vending points or by adding more sales points. Ideal retail to invest in would be one that can demonstrate strong sales at existing sales points, as well as robust overall growth in its sales.

Earnings growth

A retailer may be making high sales and be generating revenue but still remain unprofitable, especially since many retailers often lower their prices and run promotions to boost sales, often losing money on each sale. The top retail companies, however, do not face such issues as they have loyal customers who are willing to pay premium prices. Investors should thus give preference to retailers who display a healthy growth in their earnings, both in terms of their absolute earnings values and their earnings per share.

Performance during key times of the year

Much of the retail business tends to be seasonal and concentrates around the end of year festive period. Retailers that achieve strong sales during this time may make up for weaker sales during other times of the year. This being said and depending on their target market, some retailers experience greater sales during other times as well, such as the back-to-school season or the summer holidays. You will need to study the sales trends to determine the extent to which a retailer is seasonal and keep in mind that those retailers that can manage to perform strongly at key seasons for their own market, usually manage to outcompete their competitors.

Size of store network and real estate holdings

Retailers often have extensive real estate holdings as they often own the stores in their network and while maintaining those stores and improving them may often lead to shrinking profits, the spaces that retailers own or lease also have significant value, and this value may constitute a big portion of a retailer’s overall worth, especially if it owns stores in prime locations. Thus, when evaluating a retailer, investors should also look at the retailer’s real estate holdings, their value, and the efficiency in their usage.

Balance sheet strength

Retail businesses that were in a weak financial state before the pandemic, were hit hard by declining sales and could no longer sustain the losses incurred, causing them to go bankrupt. Therefore, and with this in mind, investors should pay particular attention to the health of a retailer’s balance sheet and prefer those companies with plenty of available cash and no debts or at least low debts which are easily manageable.

E-commerce sales Vs brick-and-mortar sales

In the past retailers either had physical stores or used online sales, nowadays and especially since the pandemic crisis, most companies have added to their brick and mortar shops, an e-commerce portal that they used during lockdown periods. The increased popularity and added convenience of e-commerce have often meant a faster growth for online sales than the overall growth of sales achieved. This reveals that as time goes by, retailers without a strong online presence will face difficulties in effectively competing with their rivals and investors should take this into account when evaluating which retailer to invest in.

Are retail stocks right for you?

If you choose retailers that do well in terms of business fundamentals, i.e. have low debts, healthy cash flows, and an edge over their competitors, then retail stocks may well be an ideal investment and a great opportunity to make money, especially since they also allow you to invest in a company you know and love and are a customer of.

By the end of the guide, you should know the following:

• If Consumer Services stocks is a good or a bad investment.
• How to buy Consumer Services stocks.
• Where to buy Consumer Services stocks.
• Which Consumer Services share is best to buy now?.
• Consumer Services stock price prediction: Where Will Consumer Services stock Be in the next few Years?

Best Consumer Services Stocks To Buy In September 2024? 2 Names To Know

Amazon

Despite its undeniable dominance over the years and its market cap of $1,5 trillion, the Amazon share is till comfortably ranked in the growth shares, since the continuous expansion of the offering of this ecommerce giant almost guarantees that more growth is on its way. Amazon’s long-term momentum may well be maintained by expansions into new areas, such as healthcare, as well as dipping into the cryptocurrencies’ realm. Moreover, saw the recent pandemic and the ensuing increase in online retail shopping due to lockdowns, boost its sales by 44%.

Disney

Disney is very popular and much-loved company and its stock has been around for a long time, posing as a desirable investment for many stock buyers. Find out all you need to know about investing in Disney and decide if it is a good investment choice for your own portfolio.

Disney’s wide range of business activities have for a long time kept it in the limelight and many investors are drawn to this company, not only for reasons that pertain to making a sound financial investment but also for wanting to own a part of a company that is associated with happy memories and unforgettable experiences. If you are a Disney enthusiast, then read on to obtain an overview of Disney and whether and how you can buy Disney stock.

Where Can You Buy Consumer Services stocks

There are several online sites and platforms where people from across the globe can buy Consumer Services at good exchange rates and with low or no transaction fees. To aid your quest we have comprised a list of some of the most popular Stock Trading platforms to buy Consumer Services sector's shares from and your strongly advised to consult this list before making your first purchase of or investment in Consumer Services industry.

Features to Look in Consumer Services stocks

Future Outlook for Consumer Services stocks

The pandemic may well have created a good opportunity for those interested in investing in retail stocks and especially in the stocks of consumer discretionary companies. This because such stocks may be currently trading at discounted prices due to lower demand during the hype of the pandemic, but they are set to resurge soon as life returns to normality and demand starts to increase. In fact, top-notch retail companies may well return stronger in the post-covid era, since they can afford to invest more and are also able to capture the market share of competitors who have not managed to survive the crisis. In a nutshell, the long-term outlook seems positive, especially for patient investors who can buy and hold long.

Risks of Investing in Consumer Services stocks

Tips on How to Invest in Consumer Services stocks and Make a Profit

There is no guarantee that you will make a profit when you invest in Consumer Services. However, to give yourself the best chance possible we have hand-picked the three most valuable such strategies, which you can find below:

• Tip 1: Set your own specific Financial Goals
• Tip 2: Dollar-Cost Average Your Consumer Services Investments
• Tip 3: Diversify Your Consumer Services Investment

Overall Conclusion – Final Thoughts

In this guide, the aim wasn’t only to answer simple questions like “how to buy stocks of the Consumer Services sector?” or “where to buy Consumer Services stocks?”. Instead, the goal was to equip you with the relevant knowledge and insight to be able to see and understand the bigger picture as well as make your Consumer Services stocks investment journey as successful and as profitable as possible!