7 A-Rated Consumer Discretionary Stocks to Buy for the New Year

Even though the stock market is off to a rough open this year, there’s a lot of reason to be bullish about investing in 2024. The economy looks to improve, inflation is back to manageable levels and consumer discretionary stocks look to be a good sector for new investors.

Consumer discretionary stocks are those that represent that provide non-essential goods and services. These companies do well when consumer confidence is high, and people are more likely to spend their disposable income.

Fortunately, the market has proven to be pretty resilient. Despite doom and gloom predictions that we were headed for a likely recession, consumer spending remained solid for most of 2023. propping up many consumer discretionary stocks.

The jobless rate remained decently low, and the Federal Reserve seems to be on the verge of giving the economy a soft landing, something that seemed impossible a few short months ago.

Amid this backdrop, I think it’s a good idea to be looking at some of the best consumer discretionary stocks. The names on this list all have “A” ratings in the Portfolio Grader because of their superior markets in stock performance, earnings, revenue growth, momentum and analyst sentiment.

There are no sure things in investing, but you can hedge your bets using tools like the Portfolio Grader. Here are seven names that rank highly in the consumer discretionary sector.

Amazon (AMZN)

What’s not to like about Amazon (NASDAQ:AMZN)? Right now, nothing. But a few months ago, Amazon had its detractors.

The biggest thing that plagued Amazon a few months ago was its profits. CEO Andy Jassy took over from founder Jeff Bezos in 2021 and their styles have been quite different. Bezos focused on growth, Jassy prioritizes Amazon’s profitability. That’s a good thing, considering that profits had fallen near the end of the Bezos reign.

Amazon’s profit and operation margins have grown steadily in the last few quarters. And while it’s best known as an e-commerce company, Amazon is also the leading cloud-computing company with its Amazon Web Services segment.

Amazon recorded third-quarter sales of $143.1 billion, which was an increase of 13% from a year ago. And Q4 sales are expected to be even better, from $160 billion to $167 billion.

AMZN stock is up 73% in the last year and gets an “A” rating in the Portfolio Grader.

Li Auto (LI)

I’m really high on Li Auto (NASDAQ:LI) these days. The rapidly growing Chinese electric vehicle company has been on a tremendous run over the last year as its stock price jumped 78%.

In 2023 Li delivered over 600,000 vehicles, which is the most among China’s emerging new energy automakers. December deliveries set a monthly record for the company as Li topped the 50,000 mark.

Overall, Li deliveries for the month were up 137%. And for the fourth quarter, the company’s total of 131,805 deliveries was an increase of 184% from a year ago.

It’s an impressive track record for an auto company that started producing vehicles in 2019.

As China’s economy continues to improve, I think Li will become a force to be reckoned with. LI stock gets an “A” rating in the Portfolio Grader.

Costco Wholesale Corp. (COST)

Costco Wholesale Corp. (NASDAQ:COST) is a warehouse-style retailer that operates with a membership format. Customers pay $60 per year to shop at Costco stores, which are known for bulk deals and their vast produce selection.

The company says it can keep prices low through volume purchasing and reduced employee handling in their no-frills warehouses, which offer everything from food to appliances, home goods and tires.

Earnings for the first quarter of fiscal 2024 ending November 26, 2023, included revenue of $57.8 billion, up from $54.4 billion in the same quarter a year ago. Income of $1.58 billion was up from $1.36 billion, and earnings per share of $3.58 improved from last year when EPS was $3.07.

The company is off to a great start for Q2, with December sales up nearly 10% from a year ago to reach $26.15 billion.

COST stock is up 42% in the last year and gets an “A” rating in the Portfolio Grader.

Carvana (CVNA)

Used-car retailer Carvana (NYSE:CVNA) had a great turnaround story in 2023. The company’s stock was less than $6 per share at the beginning of 2023 and looked to be in serious trouble. But by the end of the year it was more than $45, showing a gain on the year of more than 800%.

Carvana sells vehicles online via a computer or a mobile app. There are no negotiations – customers can shop the company’s entire inventory online, compare vehicles and set up their financing. It’s only after the deal is done do you actually get to see your car in person, when you pick it up at one of its “vending machine” locations or have the car delivered to you.

JPMorgan upgraded CNVA stock last month, saying that its business model “had given it a multi-year head start in the online-only space of a fragmented used vehicle industry, allowing it to expand at a rapid pace, though this came at a cost that has now come to hurt during a sharp pull-back in industry volumes because of higher rates and higher prices.”

Third-quarter earnings included revenue of $2.77 billion, down from $3.38 billion last year, but Carvana made a profit of $482 million compared to $359 million in the same quarter last year.

That’s because even though retail unit sales fell from 102,570 to 80,987 vehicles, the per-vehicle profit rose from $3,500 to $5,952.

That helps CVNA stock get an “A” rating in the Portfolio Grader.

Chipotle Mexican Grill (CMG)

Chipotle Mexican Grill (NYSE:CMG) has long been one of the most popular fast-casual food chains and one of the more popular restaurant stocks. Shares of the company are trading at more than $2,200, which makes me wonder what would happen if CMG ever split its shares.

Shares of the company rose by over 65% in 2023 and appear destined for greater heights. The company has over 3,300 restaurants in the U.S., the U.K., Canada, France and Germany, with plans to open another 300 this year.

Earnings for the third quarter were up 11% to $2.5 billion, with earnings per share rising from $9.20 a year ago to $11.32 per share.

Chipotle also saw comparable restaurant sales increase 5% in the quarter, and the company’s overall operating margin rose from 15.1% to 16%.

CMG stock gets a well-deserved “A” rating in the Portfolio Grader.

Spotify Technology (SPOT)

Spotify Technology (NYSE:SPOT) is a digital music, podcast and video service that gives customers access to thousands of tunes and hundreds of artists.

Spotify provides a free service where people can play music they want, as well as a monthly premium service that provides more features such as ad-free listening, the ability to download music and listen with friends in real time.

Spotify currently has 574 million monthly average users – up 26% from a year ago. Of those, 226 million are premium users, providing Spotify with most of its revenue. In the third quarter, Spotify generated $2.91 billion from its Premium members, and only $447 million through advertising directed at its free users.

The trick will be for Spotify to continue to convert free users to premium members. As it does that, the profits will continue to rise.

SPOT stock is up 130% over the last year and gets an “A” rating in the Portfolio Grader.

DraftKings (DKNG)

DraftKings (NASDAQ:DKNG) is a sports wagering site that is growing fast as sports wagering and in-game betting continue to grow in popularity. Currently, 38 states in the U.S. allow sports betting, which means if you’re in one of those locations, you can make bets on the DraftKings app.

DraftKings has had an impressive run, particularly when considering where it started. Remember, DraftKings didn’t go public until April 2020, right during the Covid-19 pandemic when sports leagues were completely shut down.

However, it had solid growth over the last year, as the stock price rose 180% in 2023.

Third-quarter revenue was $790 million, up a whopping 57% from a year ago as more states opened the doors to sports wagering. Monthly unique payers rose 40% to 2.3 million.

DraftKings raised its full-year guidance from a range of $3.46 billion to $3.54 billion to a range of $3.67 billion to $3.72 billion. The company gets an “A” rating in the Portfolio Grader.

On the date of publication, Louis Navellier had long positions in LI, COST and SPOT. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.

The InvestorPlace Research Staff member primarily responsible for this article had a long position in LI. The staff member did not hold (either directly or indirectly) any other positions in the securities mentioned in this article.