Consumer discretionary businesses are levered to the highs and lows of economic cycles. 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 9.8%. This performance is a stark contrast from the S&P 500’s 2.3% gain.
A cautious approach is imperative when dabbling in these companies as many also lack recurring revenue characteristics and ride short-term fads. Keeping that in mind, here are three consumer stocks that may face trouble.
Rush Street Interactive (RSI)
Market Cap: $2.13 billion
Specializing in online casino gaming and sports betting, Rush Street Interactive (NYSE: RSI) is an operator of digital gaming platforms.
Why Do We Pass on RSI?
- Performance surrounding its monthly active users has lagged its peers
- Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability
- Free cash flow margin is not anticipated to grow over the next year
Rush Street Interactive is trading at $20.33 per share, or 37.7x forward P/E. Check out our free in-depth research report to learn more about why RSI doesn’t pass our bar.
1-800-FLOWERS (FLWS)
Market Cap: $210.1 million
Founded in 1976, 1-800-FLOWERS (NASDAQ: FLWS) is an online retailer of flowers, gifts, and gourmet foods, serving customers globally.
Why Do We Think FLWS Will Underperform?
- Products and services aren't resonating with the market as its revenue declined by 3.1% annually over the last five years
- 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 11× could force the company to raise capital at unfavorable terms if market conditions deteriorate
At $3.27 per share, 1-800-FLOWERS trades at 0.1x forward price-to-sales. To fully understand why you should be careful with FLWS, check out our full research report (it’s free).
JLL (JLL)
Market Cap: $13.78 billion
Founded in 1999 through the merger of Jones Lang Wootton and LaSalle Partners, JLL (NYSE: JLL) is a company specializing in real estate advisory and investment management services.
Why Should You Dump JLL?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 9.5% for the last five years
- Free cash flow margin is expected to remain in place over the coming year
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
JLL’s stock price of $293.90 implies a valuation ratio of 13.1x forward P/E. Read our free research report to see why you should think twice about including JLL in your portfolio.
High-Quality Stocks for All Market Conditions
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn't over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
