10 Best Consumer Discretionary Stocks to Buy Now

Published September 19, 2022 at 2:49 pm EDT Updated September 7, 2026 at 2:28 pm EDT

In this article, we will take a look at the 10 Best Consumer Discretionary Stocks to Buy Now.

Consumer discretionary companies manufacture and sell items that are not essential for consumers and are purchased when income is available after making essential purchases. The sector can be further divided into these major industries: automotive, consumer products, retail, wholesale & distribution, and transportation, hospitality & services. Positive and bullish sentiments towards future employment prospects and essential goods allows consumers to spend more freely on the discretionary goods and services.

The first half of 2022 has been rife with uncertainty, with rising inflation and recessionary winds keeping the major stock indices down while a damper has been put on the economy. The consumer discretionary sector is among the sectors that have been badly hurt by the current market sentiments. The rise in inflation due to supply chain constraints as well as commodity price hikes brought a bearish trend to this sector.

According to the data shared by the Fed recently, second consecutive quarter has displayed contraction in the US economy. Although the two consecutive quarters of contraction usually amount to a ‘recession’, the outlook may not be as bleak. The key takeaways from the Fed announcement should be that “rate hikes are having their intended impact” and “we are probably closer to the end of the Fed’s rate hiking cycle than the beginning”, according to a JP Morgan report.

According to McKinsey & Company’s Brian Gregg, “[d]espite recent headlines of sky-high inflation and record-breaking gas prices, consumer spending and confidence remains surprisingly strong”. Consumers are switching to private label grocery store brands and are focusing more on values. Consumer discretionary stocks benefit from the power of their brands. These sentiments further support our choice of picking stocks that have high brand value and hold market leading positions.

Another Deloitte report holds a bullish trend for the sector while discussing the economic outlook for consumer products, “The baseline outlook for 2022 is for relatively strong growth in consumer products”, and “During the pandemic, governments, businesses, and individuals undertook actions that set the stage for strong economic growth.”

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The Consumer Discretionary sector is on a recovery path after suffering from the pandemic for two years and the resultant supply chain disruptions. The month of July has been a complete reversal of the month of June as 11 sectors gained market value with Consumer discretionary sector also making a significant recovery, gaining 13.34% in the month, and closing 19.83% down YTD. We still believe it is a bit early to go all in because we expect the stock market to decline at least another 10% as the 10-year Treasury bond yield crosses the 3.5% threshold.

Below is the list of 10 best consumer discretionary stocks that hedge funds were piling into. The stocks picked in this article are leaders in their respective industries and domains and have strong fundamentals with revenues showing strong growth in the latest quarter. In addition, analysts are bullish on these stocks and maintain ‘Buy’ ratings with significant potential in stock price increases in the next 12 months.

Methodology

The stocks are ranked based on the number of hedge funds that currently hold positions in these stocks, out of the 895 prominent hedge funds tracked by Insider Monkey.

10. The Home Depot, Inc. (NYSE:HD)

Number of Hedge Fund Holders: 80

Based in Atlanta, Georgia, The Home Depot, Inc. (NYSE:HD), is the world’s largest home improvement retailer with more than 2,300 stores in the United States, Mexico, and Canada. In addition to the physical stores, the company also operates its ecommerce platform and offers more than a million products focused on home improvement for professional contractors as well as individuals undertaking DIY projects.

In August, The Home Depot, Inc. released its financial results for the second quarter of 2022. Its net sales increased by 7% y-o-y to $43.7 billion, while its net earnings increased by 8% y-o-y to $5.2 billion, for the three months ended July 31, 2022. The normalized EPS was recorded at $5.05 per share, beating the consensus by $0.12.

The Home Depot, Inc. declared a cash dividend of $1.90 per share for the second quarter and announced a $15 billion share repurchase program. Following the earnings release, Truist analyst Scot Ciccarelli raised the price target on its shares to $399 from $375.

As of Q2 2022, 80 of the 895 hedge funds tracked by Insider Monkey have positions in The Home Depot, Inc., worth $5.4 billion.

Diamond Hill Capital mentioned The Home Depot, Inc. in its Q1 2022 investor letter. Here is what the firm has to say:

“Home Depot shares underperformed as continued solid fundamental results were outweighed by concerns about the impact rising mortgage rates may have on the housing market and general inflationary pressures potentially leading to a consumer spending slowdown. We view the long-term prospects and multi-year fundamental outlook as unchanged.”

9. General Motors Company (NYSE:GM)

Number of Hedge Fund Holders: 75

General Motors Company (NYSE:GM) is a leading multinational automotive company focused on manufacturing and sale of trucks, crossovers, cars and automobile parts and accessories across the globe. Major brands such as Buick, Cadillac, Chevrolet, GMC, Holden, Baojun, and Wuling fall under its wings. It has more than 110 facilities and above 4,000 dealers in the US. Based in Detroit, Michigan and sold 2.86 million vehicles in 2021.

In July, General Motors Company released it’s the financial report for the second quarter of fiscal year 2022. Its total revenue increased by 4.7% year-on-year to $35.8 billion, while its net income declined by 41% year-on-year to $1.6 billion, for the three months ended June 30, 2022. The decline in net income mainly resulted from an increase in cost of sales. The normalized EPS was recorded at $1.14, falling short of the analysts’ estimate by $0.18.

As of Q2 2022, 75 hedge funds tracked by Insider Monkey have positions in General Motors Company, worth $3.4 billion.

Here is what Oakmark Global Fund has to say about General Motors Company in its Q1 2022 investor letter:

“General Motors was a detractor during the quarter, due to increased macro uncertainty, higher fuel prices, and concerns over rising input costs, which pressured the company in particular and the auto industry as a whole. While we are closely monitoring the potential impact of these dynamics, industry demand remains robust, driven by strong consumer balance sheets and pent-up demand after multiple years of constrained production. We also remain confident in GM’s ability to navigate a complex operating environment, which the company has consistently demonstrated over the past few years. Finally, the long-term picture remains bright. We believe GM is significantly undervalued, is well-positioned for the long-term transition to electric vehicles and has numerous needle-moving ancillary business opportunities (most notably Cruise, which is an industry leader in autonomous vehicle technology) that are under-appreciated.”

8. Activision Blizzard, Inc. (NASDAQ:ATVI)

Number of Hedge Fund Holders: 84

Activision Blizzard, Inc. (NASDAQ:ATVI) is one of the world’s leading video games and interactive entertainment company with operations across North America, Asia, and Europe. Its portfolio comprises of major gaming industry staples such as Call of Duty®, Skylanders®, World of Warcraft®, Overwatch®, Diablo®, Candy Crush™, and Bubble Witch™, with hundreds of millions of combined monthly active users across the globe.

In August, Activision Blizzard, Inc. released its financial results for the second quarter of 2022. Its total revenue declined by 28% y-o-y to $1.6 billion, while its net income declined by 68% y-o-y to $280 million, for the three months ended June 30, 2022. The normalized EPS was recorded at $0.48 for the quarter, narrowly missing the consensus by $0.01.

Activision Blizzard, Inc. entered into a merger agreement with Microsoft Corporation (NASDAQ:MSFT) in January 2022. Microsoft agreed to acquire all outstanding common shares of Activision Blizzard Inc for $95 per share in an all-cash transaction. The proposed transaction was approved by Activision’s shareholders in April and is expected to close before June 30, 2023.

Activision Blizzard, Inc. is among the top 30 stocks based on the number of hedge funds holding its shares. As of Q2 2022, 84 of the 895 hedge funds tracked by Insider Monkey held its shares with a total value of $9.2 billion.

7. Tesla, Inc. (NASDAQ:TSLA)

Number of Hedge Fund Holders: 72

Based in Austin, Texas, Tesla, Inc. (NASDAQ:TSLA), designs, develops, manufactures, sell and lease fully electric vehicles and energy generation and storage solutions. Its current portfolio of products includes Model 3 and Model S sedans, Model Y and Model X SUVs, while upcoming products include Cybertruck, Tesla Roadster and Tesla Semi – a light commercial vehicle. In addition, the company sells battery energy storage products as well as solar energy systems. Tesla, Inc. produced 930,422 vehicles in 2021.

In July, Tesla, Inc. released its financial results for the second quarter of 2022. Its total sales increased by 42% y-o-y to $16.9 billion, while its net earnings increased by 93% y-o-y to $2.3 billion, for the three months ended June 30, 2022. The EPS was recorded at $2.27, beating the consensus by $0.46.

As of Q2 2022, according to the data on 895 hedge funds tracked by Insider Monkey, 72 hedge funds held shares of Tesla, Inc., worth $7.2 billion.

Here is what GMO LLC has to say about Tesla, Inc. in its Q1 2022 investor letter:

“To put the demand growth for clean energy materials into perspective, let’s look at Tesla. At its Battery Day last year, Tesla projected three terawatt hours of lithium-ion battery capacity needed in 2030 for the EVs and storage they expect to produce. To reach this target, Tesla alone would gobble up approximately 75% of the world’s current nickel production and four times the world’s current lithium production. These numbers are astounding enough, but when one considers that EVs currently represent just 15% of global nickel demand and about 45% of lithium demand and that Tesla will likely be producing only a small proportion of the world’s EVs in 2030, the implications are staggering. Clean energy materials companies will make a lot more money in the decades to come than they ever have both because they will be selling a lot more metric tons of material and because there are certain to be shortages where supply can’t keep up with the rapidly growing demand.”

6. Expedia Group, Inc. (NASDAQ:EXPE)

Number of Hedge Fund Holders: 80

Expedia Group, Inc. (NASDAQ:EXPE), is an online travel company based in Seattle, Washington. It provides travel and advertising services to its customers across the globe through multiple brands. The portfolio comprises brands including Brand Expedia, Hotels.com, Vrbo (previously HomeAway), Orbitz, Travelocity, ebookers, Wotif Group, and trivago. Gross bookings on its platforms nearly doubled to $74.4 billion in 2021 due to a post-pandemic resurgence in tourism.

Expedia Group, Inc. released the financial results for Q2 2022 earlier this year in August. Its revenue increased by 51% y-o-y to $3.2 billion, while its net loss decreased by 39% y-o-y to $185 million, for the three months ended June 30, 2022. It reported a normalized EPS of $1.96, beating the consensus by $0.37.

As of Q2 2022, 80 of the 895 hedge funds tracked by Insider Monkey owned shares of Expedia Group, Inc., valued at $3 billion.

5. Booking Holdings Inc. (NASDAQ:BKNG)

Number of Hedge Fund Holders: 93

Based in Norwalk, Connecticut, Booking Holdings Inc. (NASDAQ:BKNG), is a leading provider of online travel and related services with a presence in more than 220 countries and territories across the world. The company provides its services primarily through six online platforms: Booking.com, Priceline, Agoda, Rentalcars.com, KAYAK and OpenTable. It boasts more than 28 million listings of hotels, homes, apartments, and other unique places to stay across its platforms.

Booking Holdings Inc. recorded Gross travel bookings of $76.6 billion in 2021, 116% more than the prior year. Its total revenues increased by 99% y-o-y to $4.3 billion, while it recorded a net income of $857 million, for three months ended June 30, 2022. The EPS was recorded at $21.07, beating the consensus by $5.23.

As of Q2 2022, 93 of the 895 hedge funds tracked by Insider Monkey have positions in Booking Holdings Inc., worth $5.5 billion. Its largest shareholder is Ken Griffin’s Citadel Investment Group with ownership of 761,500 shares valued at $1.3 billion.

4. Netflix, Inc. (NASDAQ:NFLX)

Number of Hedge Fund Holders: 95

Netflix, Inc. (NASDAQ: NFLX) is a leading provider of streaming entertainment services based in Los Gatos, California. It boasts more than 220 million paid memberships across more than 190 countries and offers a film and television series library through distribution deals as well as its own productions.

In July, Netflix, Inc. released its financial results for the second quarter of 2022. Its total revenue increased by 8.6% y-o-y to $7.8 billion, while its net income increased by 6.5% y-o-y to $1.4 billion, for the three months ended June 30, 2022. The normalized EPS was recorded at $3.20, beating the consensus by $0.25.

As of Q2 2022, 95 of the 895 hedge funds tracked by Insider Monkey held shares of Netflix, Inc., worth $4.7 billion. Ken Fisher’s Fisher Asset Management was its largest shareholder with ownership of 6.5 million shares valued at $1.1 billion.

Here is what Oakmark Fund has to say about Netflix, Inc. in its Q2 2022 investor letter:

“Netflix‘s stock price was down considerably after providing a weaker than expected outlook for both subscriber growth and profit margins. After meeting with management and scrutinizing our investment thesis, we lowered our estimate of business value to account for the company’s softer near-term guidance. However, we believe the decline in the company’s share price more than adjusts for this. Indeed, Netflix now trades for a discount to the S&P 500 Index on next year’s GAAP earnings despite our view that the company remains a much better than average business run by a highly accomplished management team. We believe the company’s lead in streaming remains intact and we expect terminal operating margins to be substantially higher than they are today. Furthermore, we are encouraged by Netflix’s potential to enhance revenue growth through advertising, the monetization of password sharing and further penetrating international markets.”

3. The Walt Disney Company (NYSE:DIS)

Number of Hedge Fund Holders: 109

Based in Burbank, California, Walt Disney Company (NYSE:DIS) is a worldwide entertainment company operating across Media and Entertainment Distribution, and Parks, Experiences and Products segments. It operates 6 resort destinations with 12 theme parks and 53 resorts in the US, Europe, and Asia; a cruise line with 4 ships; a beach resort in Hawaii; vacation ownership program; and two guided tour adventure businesses. The company is also home to entertainment brands such as ESPN, Disney+, Hulu, Marvel Studios, and National Geographic, among others.

Earlier this year in August, Walt Disney Company released its financial results for the quarter ended July 2, 2022. Its total revenues increased by 26% y-o-y to $21.5 billion, while its net earnings increased by 34% y-o-y to $1.5 billion, for the three months. The normalized EPS was recorded at $1.09 per share, beating the consensus by $0.10.

As of Q2 2022, 109 hedge funds tracked by Insider Monkey held shares of Walt Disney Company, worth $3.2 billion.

Here is what Oakmark Fund had to say about The Walt Disney Company in its Q2 2022 investor letter:

“Disney is one of the most beloved consumer companies in the world. Its media business has a rich library of intellectual property, which provides a powerful engine for creating new content across the Disney, Pixar, Marvel, and Star Wars brands. This content also contributes to the success of Disney’s theme parks, which generated nearly half the company’s earnings and grew more than 10% annually in the decade prior to the pandemic. Shares have fallen nearly 50% over the past year as investors worried about the company’s ability to transition its media business to a direct-to-consumer streaming world. This transition has required management to make investments in its Disney+ streaming service that are depressing profitability today. However, we believe these investments will ultimately produce attractive returns as Disney+ continues to grow subscribers and increase pricing over time. As a result, we were able to purchase shares at a substantial discount to our estimate of intrinsic value.”

2. Uber Technologies, Inc. (NYSE:UBER)

Number of Hedge Fund Holders: 129

San Francisco, California-based, Uber Technologies, Inc. (NYSE:UBER) provides technology platforms matching consumers looking for rides and independent ride services providers. It also offers other forms of transportation including public transit, bikes, and scooters. Other offerings include food delivery on demand, freight services, business fleet services, and same day delivery options. It operates in over 70 countries worldwide and boasted 115 million monthly active platform consumers as of March 31, 2022.

Earlier this year in August, Uber Technologies, Inc. released its financial results for the quarter ended June 30, 2022. Its total revenue increased by 106% y-o-y to $8.1 billion, while it reported a net loss of $2.6 billion, for the three months. The normalized EPS was recorded at -$0.03 for the quarter, beating the consensus by $0.02.

As of Q2 2022, 129 of the 895 hedge funds tracked by Insider Monkey were long Uber Technologies, Inc., holding shares worth $5.3 billion. Ken Fisher’s Fisher Asset Management was the largest shareholder with ownership of 24.5 million shares valued at $501 million.

Here is what ClearBridge Large Cap Growth Strategy has to say about Uber Technologies, Inc. in its Q3 2021 investor letter:

“We have also been looking for multi-year secular trends outside of the IT and Internet sectors to help us maintain a portfolio that can perform well in markets with varied sector or factor leadership. In particular, electrification of the global economy and the transition to electric vehicles (EVs) are areas where we continue to add exposure. We are investing in the brains behind EVs through NXP in the control center and Aptiv for safety features. Global rideshare leader Uber will also be a key player in the transition from internal combustion engines to EVs.”

1. Amazon.com, Inc. (NASDAQ:AMZN)

Number of Hedge Fund Holders: 252

Amazon.com, Inc. (NASDAQ:AMZN), is a multinational technology company operating online and physical stores where it sells its own products as well as allows third-party sellers to sell their products to consumers. It manufactures and sells electronic devices, including Kindle, Fire tablet, Fire TV, Echo, and Ring, and develops and produces media content; and provides cloud computing services through Amazon Web Services platform. Its ecommerce platform is home to more than 1.7 million small and medium businesses.

In July, Amazon released its financial results for the second quarter of 2022. Its total revenue increased by 7% y-o-y to $121.2 billion, while it reported a net loss of $2 billion for the three months ended June 30, 2022. The normalized EPS was recorded at (-$0.20) for the quarter, missing the consensus by $0.32.

Amazon.com, Inc. is highly sought after by hedge funds, with the second highest number of hedge funds at 252 out of the 895 tracked by Insider Monkey, holding its shares with a total value of $30.1 billion. The ecommerce giant ranks #1 on the list of 10 best consumer discretionary stocks to buy now.

Oakmark Funds, an investment management firm, mentioned Amazon.com, Inc. in its Q2 2022 investor letter. Here’s what they said:

“Amazon is the leading e-commerce and cloud-computing provider in the world. Two-thirds of U.S. households are Amazon Prime subscribers, and over half of all online product searches now start on Amazon. We believe the company’s strong customer loyalty and massive infrastructure are significant barriers to entry in a growing e-commerce market. Separately, Amazon Web Services (“AWS”) controls nearly half of the market in cloud computing. We believe AWS has become utility-like in nature and scale and we expect healthy growth moving forward as IT workloads continue moving to the cloud. More recently, concerns about rising investment spending have weighed on the stock-as they have in times past-providing us another opportunity to purchase shares at a very attractive price. At our purchase price and valuing AWS like its peers, an investor isn’t paying much of anything for the immensely valuable e-commerce franchise.”

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