Consumer discretionary businesses are levered to the highs and lows of economic cycles. This sensitive demand profile can lead to some stock price volatility, but over the past six months, the industry has stayed on track as its 4% return was close to the S&P 500’s.

Regardless of these results, investors should tread carefully as many companies in this space are unpredictable because they lack recurring revenue business models. With that said, here are three consumer stocks we’re steering clear of.

The New York Times (NYT)

Market Cap: $7.69 billion

Founded in 1851, The New York Times (NYSE:NYT) is an American media organization known for its influential newspaper and expansive digital journalism platforms.

Why Should You Dump NYT?

1. Number of subscribers has disappointed over the past two years, indicating weak demand for its offerings
2. Projected sales growth of 6% for the next 12 months suggests sluggish demand
3. Waning returns on capital imply its previous profit engines are losing steam

The New York Times is trading at $47.07 per share, or 22.6x forward price-to-earnings. To fully understand why you should be careful with NYT, check out our full research report (it’s free).

YETI (YETI)

Market Cap: $2.92 billion

Founded by two brothers from Texas, YETI (NYSE:YETI) specializes in durable outdoor goods including coolers, drinkware, and other gear tailored to adventure enthusiasts.

Why Does YETI Give Us Pause?

1. Sales trends were unexciting over the last two years as its 7.4% annual growth was below the typical consumer discretionary company
2. Anticipated sales growth of 6% for the next year implies demand will be shaky
3. Diminishing returns on capital suggest its earlier profit pools are drying up

At $35.10 per share, YETI trades at 12.2x forward price-to-earnings. Check out our free in-depth research report to learn more about why YETI doesn’t pass our bar.

Adtalem (ATGE)

Market Cap: $3.72 billion

Formerly known as DeVry Education Group, Adtalem Global Education (NYSE:ATGE) is a global provider of workforce solutions and educational services.

Why Do We Think Twice About ATGE?

1. Annual revenue growth of 8.2% over the last two years was below our standards for the consumer discretionary sector
2. Estimated sales growth of 6.4% for the next 12 months implies demand will slow from its two-year trend
3. Underwhelming 8.8% return on capital reflects management’s difficulties in finding profitable growth opportunities

Adtalem’s stock price of $100.34 implies a valuation ratio of 16x forward price-to-earnings. Read our free research report to see why you should think twice about including ATGE in your portfolio, it’s free.

Stocks We Like More

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Take advantage of the rebound by checking out 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 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.