Consumer discretionary businesses are levered to the highs and lows of economic cycles. Thankfully for the industry, demand trends seem to be healthy as discretionary stocks have gained 7.5% 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. Keeping that in mind, here are three consumer stocks that may face trouble.
Figs (FIGS)
Market Cap: $2.57 billion
Rising to fame via TikTok and founded in 2013 by Heather Hasson and Trina Spear, Figs (NYSE:FIGS) is a healthcare apparel company known for its stylish approach to medical attire and uniforms.
Why Do We Avoid FIGS?
- Lackluster 19.1% annual revenue growth over the last five years indicates the company is losing ground to competitors
- Earnings per share have contracted by 3.6% annually over the last four years, a headwind for returns as stock prices often echo long-term EPS performance
- Free cash flow margin is projected to show no improvement next year
Figs is trading at $15.45 per share, or 59.1x forward P/E. Dive into our free research report to see why there are better opportunities than FIGS.
Travel + Leisure (TNL)
Market Cap: $4.02 billion
Formerly known as Wyndham Destinations, Travel + Leisure (NYSE:TNL) is a global vacation company that provides travelers with vacation ownership, exchange, and travel services.
Why Is TNL Risky?
- Sluggish trends in its tours conducted suggest customers aren’t adopting its solutions as quickly as the company hoped
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
- High net-debt-to-EBITDA ratio of 8× increases the risk of forced asset sales or dilutive financing if operational performance weakens
Travel + Leisure’s stock price of $64.41 implies a valuation ratio of 8.6x forward P/E. If you’re considering TNL for your portfolio, see our FREE research report to learn more.
WeightWatchers (WW)
Market Cap: $106.7 million
Known by many for its old cable television commercials, WeightWatchers (NASDAQ:WW) is a wellness company offering a range of products and services promoting weight loss and healthy habits.
Why Are We Out on WW?
- Products and services have few die-hard fans as sales have declined by 12.4% annually over the last five years
- Cash burn makes us question whether it can achieve sustainable long-term growth
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
At $10.81 per share, WeightWatchers trades at 3.8x forward EV-to-EBITDA. To fully understand why you should be careful with WW, check out our full research report (it’s free).
High-Quality Stocks for All Market Conditions
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.