3 Consumer Discretionary Stocks Set to Thrive in 2025

In the last few months, consumer spending has rapidly increased, fueled by steady economic recovery, easing inflation, supportive government initiatives, and a favorable job market. This rapid rise in consumer spending, especially amid the holiday shopping season, is propelling the consumer discretionary industry’s growth.

Given this backdrop, it could be wise to invest in fundamentally strong consumer discretionary stocks Amazon.com, Inc. (AMZN), The TJX Companies, Inc. (TJX), and Travel + Leisure Co. (TNL) with significant growth potential.

With positive economic indicators like lower borrowing costs, low unemployment rates, and a steady job market, consumer spending is continuing on its upward trend. A report by McKinsey showed that the US consumer optimism reached its highest level in the fourth quarter of 2024.

As the U.S. inflation is easing, it is boosting consumers’ confidence in the market, allowing them to consider spending on non-essential items. Further, aspects like rising disposable income, online market expansion, and strategic retail discounts and marketing will fuel consumer spending in the ongoing quarter.

Also, amid the holiday season, U.S. retail is expected to surge to unprecedented levels. During November 2024, U.S. retail sales increased 0.7% from the prior month and above the forecast of 0.5%. In the ongoing holiday shopping season, motor vehicles and part dealers and non-store retailers’ sales marked the highest increases of 2.6% and 1.8% in November.

According to Statista, the total value of retail sales during the holiday shopping season is expected to total $973 billion in 2024, representing a 4.8% increase from the previous year’s value of around $929 billion.

With these trends in mind, investors could consider investing in fundamentally sound consumer discretionary stocks: AMZN, TJX, and TNL.

Amazon.com, Inc. (AMZN)

AMZN internationally engages in the retail sale of consumer products, advertising, and subscription services through online and physical stores. It operates through three segments: North America, International, and Amazon Web Services (AWS). The company also manufactures and sells electronic devices and develops and produces media content.

On December 9, AMZN and Intuit Inc. (INTU) announced a multi-year partnership to empower millions of Amazon sellers with Intuit’s AI-driven platform, offering financial management tools, compliance support, and capital access. Intuit’s AI-driven expert platform will allow AMZN’s sellers to discover and access Intuit’s platform seamlessly, benefiting from powerful financial insights.

On December 4, AMZN’s Amazon Web Services, Inc. (AWS) announced four innovations for Amazon SageMaker AI to help customers get started faster with popular publicly available models, maximize training efficiency, lower costs, and use their preferred tools to accelerate generative artificial intelligence (AI) model development.

During the third quarter that ended September 30, 2024, AMZN reported total net sales of $158.88 billion, indicating growth of 11% year-over-year. Its operating income grew 55.6% from the prior-year quarter to $17.41 billion. The company’s net income and EPS amounted to $15.33 billion and $1.43, reflecting increases of 55.2% and 52.1% from the prior-year quarter, respectively.

Street expects AMZN’s revenue for the fourth quarter (ending December 2024) to increase 10.2% year-over-year to $187.24 billion. The company’s EPS for the ongoing quarter is expected to grow 47.6% year-over-year to $1.48. Also, AMZN has topped the consensus EPS estimates in all four trailing quarters, which is impressive.

Shares of AMZN have soared 26.6% over the past six months and 51.2% over the past year to close the last trading session at $232.93.

AMZN’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

AMZN has an A grade for Sentiment. It also has a B grade for Momentum, Quality, and Growth. It is ranked #14 out of 52 stocks in the A-rated Internet industry.

In addition to the POWR Ratings we’ve stated above, we also have AMZN’s ratings for Value and Stability. Get all AMZN ratings here.

The TJX Companies, Inc. (TJX)

TJX operates as an off-price apparel and home fashion retailer internationally. The company operates in four segments: Marmaxx; HomeGoods; TJX Canada; and TJX International. It sells family apparel, home fashions, cookware, jewelry and accessories, and other merchandise.

On December 9, TJX declared a quarterly dividend on its common stock of $.375 per share, payable on March 6, 2025, to shareholders of record on February 13, 2025.

TJX pays an annual dividend of $1.50, which translates to a yield of 1.21% at the current share price. Its four-year average dividend yield is 1.30%. Also, the company’s dividend payouts have increased at a CAGR of 11.9% over the past three years.

On June 7, TJX entered into a definitive agreement for a joint venture with Grupo Axo, S.A.P.I. de C.V., an operator of global brands in Mexico and South America. Under the terms of the agreement, TJX owns 49%, and Axo owns 51% of the joint venture. The agreement comprises Axo’s off-price physical store business in Mexico, which includes over 200 stores.

For the third quarter that ended November 2, 2024, TJX’s net sales increased 6% year-over-year to $14.06 billion. Its income before income taxes grew 9.3% from the year-ago value to $1.74 billion. In addition, the company’s net income and EPS came in at $1.30 billion and $1.14, up 8.9% and 10.7% from the prior year’s quarter, respectively.

Street expects TJX’s revenue and EPS for the first quarter (ending April 2025) to increase 5.7% and 6.8% year-over-year to $13.19 billion and $0.99, respectively. Furthermore, the company surpassed the consensus revenue and EPS estimates in all of the trailing four quarters.

TJX’s stock has gained 12.3% over the past six months and 37.7% over the past year to close the last trading session at $123.72.

TJX’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.

The stock has a B grade for Stability, Sentiment, Momentum, and Quality. TJX is ranked #13 among 60 stocks in the Fashion & Luxury industry.

Click here to access TJX’s additional ratings for Growth and Value.

Travel + Leisure Co. (TNL)

TNL internationally provides hospitality services and travel products. The company operates through two segments: Vacation Ownership and Travel and Membership. The company develops, markets, and sells vacation ownership interests (VOIs) to individual consumers and provides consumer financing for the sale of VOIs and property management services at resorts.

On November 6, TNL’s board of directors declared a regular cash dividend of $0.50 per share on the company’s common stock. The dividend was scheduled for payment on December 31, 2024, to shareholders who were on record as of December 13, 2024. It pays an annual dividend of $2, which translates to a dividend yield of 3.58% at the prevailing price levels.

TNL pays an annual dividend of $2, which translates to a yield of 3.75% at the current share price. Its four-year average dividend yield is 3.53%. Moreover, the company’s dividend payouts have increased at a CAGR of 17% over the past three years.

TNL’s net revenues increased 0.7% year-over-year to $993 million during the third quarter that ended September 30, 2024. Its operating income was $189 million, and adjusted EBITDA was $242 million for the same period. Also, the company’s adjusted net income came in at $110 million. Its adjusted EPS of $1.57 indicates growth of 1.9% from the prior year’s quarter.

As per its fourth quarter 2024 guidance, TNL expects adjusted EBITDA of $240 million to $260 million, and its gross VOI sales are expected between $550 million and $600 million.

Also, for the full year, the company reaffirmed its adjusted EBITDA of $915 million to $935 million. It now expects gross VOI sales of $2.25 billion to $2.30 billion.

Analysts expect TNL’s revenue for the first quarter (ending March 2025) to increase 2.6% year-over-year to $940.09 million, and its EPS is expected to grow 10.3% year-over-year to $1.07 for the same quarter. Moreover, the company has topped the consensus EPS estimates in each of the trailing four quarters, which is impressive.

TNL’s stock has surged 20.4% over the past six months and 33.4% over the past year to close the last trading session at $53.33.

TNL’s POWR Ratings reflect its bright outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

The stock has a B grade for Value. Within the B-rated Travel – Hotels/Resorts industry, TNL is ranked #3 among 20 stocks.

Click here to access additional ratings of TNL for Growth, Stability, Momentum, Quality, and Sentiment.

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AMZN shares were trading at $231.15 per share on Tuesday afternoon, down $1.78 (-0.76%). Year-to-date, AMZN has gained 52.13%, versus a 28.33% rise in the benchmark S&P 500 index during the same period.

Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.

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