Consumer discretionary businesses are levered to the highs and lows of economic cycles. Thankfully for the industry, all signs are pointing up as discretionary stocks have gained 19.3% over the past six months, beating the S&P 500’s 15.3% return.
Nevertheless, this stability can be deceiving as many companies in this space lack recurring revenue characteristics and ride short-term fads. With that said, here are three consumer stocks best left ignored.
PlayStudios (MYPS)
Market Cap: $81.26 million
Founded by a team of former gaming industry executives, PlayStudios (NASDAQ: MYPS) offers free-to-play digital casino games.
Why Do We Avoid MYPS?
- Sluggish trends in its daily active users suggest customers aren’t adopting its solutions as quickly as the company hoped
- Historically negative EPS is a worrisome sign for conservative investors and obscures its long-term earnings potential
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
At $0.65 per share, PlayStudios trades at 2.5x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why MYPS doesn’t pass our bar.
WideOpenWest (WOW)
Market Cap: $427.8 million
Initially started in Denver as a cable television provider, WideOpenWest (NYSE: WOW) provides high-speed internet, cable, and telephone services to the Midwest and Southeast regions of the U.S.
Why Do We Pass on WOW?
- Demand for its offerings was relatively low as its number of subscribers has underwhelmed
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
WideOpenWest is trading at $5.16 per share, or 1.7x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including WOW in your portfolio.
Nike (NKE)
Market Cap: $97.1 billion
Originally selling Japanese Onitsuka Tiger sneakers as Blue Ribbon Sports, Nike (NYSE: NKE) is a global titan in athletic footwear, apparel, equipment, and accessories.
Why Do We Think NKE Will Underperform?
- Weak constant currency growth over the past two years indicates challenges in maintaining its market share
- Free cash flow margin is forecasted to shrink by 2.9 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
- Diminishing returns on capital suggest its earlier profit pools are drying up
Nike’s stock price of $65.70 implies a valuation ratio of 34.8x forward P/E. To fully understand why you should be careful with NKE, check out our full research report (it’s free for active Edge members).
High-Quality Stocks for All Market Conditions
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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