The performance of consumer discretionary businesses is closely linked to economic cycles. Thankfully for the industry, demand trends seem to be healthy as discretionary stocks have gained 6.1% over the past six months. This performance has nearly mirrored the S&P 500.
Nevertheless, this stability can be deceiving as many companies in this space lack recurring revenue characteristics and ride short-term fads. On that note, here are three consumer stocks we’re swiping left on.
Market Cap: $62.34 billion
Founded in 1919, Hilton Worldwide (NYSE:HLT) is a global hospitality company with a portfolio of hotel brands.
Why Are We Cautious About HLT?
Hilton is trading at $259.10 per share, or 32.4x forward price-to-earnings. Check out our free in-depth research report to learn more about why HLT doesn’t pass our bar.
Market Cap: $6.64 billion
With almost 100% of its properties under franchise agreements, Choice Hotels (NYSE:CHH) is a hotel franchisor known for its diverse brand portfolio including Comfort Inn, Quality Inn, and Clarion.
Why Are We Hesitant About CHH?
Choice Hotels’s stock price of $144.19 implies a valuation ratio of 20.2x forward price-to-earnings. Read our free research report to see why you should think twice about including CHH in your portfolio, it’s free.
Market Cap: $41.32 billion
Established in 1906, CBRE (NYSE:CBRE) is one of the largest commercial real estate services firms in the world.
Why Do We Avoid CBRE?
At $132.80 per share, CBRE trades at 23.3x forward price-to-earnings. If you’re considering CBRE for your portfolio, see our FREE research report to learn more.
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