Most consumer discretionary businesses succeed or fail based on the broader economy. 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 2.6%. This performance was discouraging since the S&P 500 returned 6.6%.
A cautious approach is imperative when dabbling in these companies as many also lack recurring revenue characteristics and ride short-term fads. With that said, here are three consumer stocks we’re passing on.
Opendoor (OPEN)
Market Cap: $5.18 billion
Founded by real estate guru Eric Wu, Opendoor (NASDAQ: OPEN) offers a technology-driven, convenient, and streamlined process to buy and sell homes.
Why Do We Steer Clear of OPEN?
- Performance surrounding its homes sold has lagged its peers
- Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 27.5 percentage points over the next year
- Negative earnings profile makes it challenging to secure favorable financing terms from lenders
Opendoor’s stock price of $5.24 implies a valuation ratio of 1.1x forward price-to-sales. To fully understand why you should be careful with OPEN, check out our full research report (it’s free).
G-III (GIII)
Market Cap: $1.34 billion
Founded as a small leather goods business, G-III (NASDAQ: GIII) is a fashion and apparel conglomerate with a diverse portfolio of brands.
Why Do We Think GIII Will Underperform?
- Muted 5.8% annual revenue growth over the last five years shows its demand lagged behind its consumer discretionary peers
- Poor free cash flow margin of 10.9% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- ROIC hasn’t moved, making investors question whether its recent investments can increase profitability
At $30.75 per share, G-III trades at 11.6x forward P/E. Dive into our free research report to see why there are better opportunities than GIII.
Viking (VIK)
Market Cap: $35.36 billion
From a single river cruise offering to a fleet of 96 vessels across multiple continents, Viking (NYSE: VIK) operates a fleet of small luxury cruise ships offering river, ocean, and expedition voyages focused on cultural enrichment and destination immersion.
Why Should You Dump VIK?
- Lackluster 17.1% annual revenue growth over the last two years indicates the company is losing ground to competitors
- Operating margin of 21.1% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 18% for the last two years
Viking is trading at $77.40 per share, or 25.2x forward P/E. Read our free research report to see why you should think twice about including VIK in your portfolio.
Stocks We Like More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
