One of the big stories of 2017 is the surging tech stocks, which have outperformed the strong gains of the S&P 500 Index (SPX). The techs have risen at about double the 9.8% gain of the S&P year-to-date through Monday. But what’s less known is that two other sectors have also outperformed the S&P: health care, which we discussed in a separate story in Investopedia, and consumer discretionary stocks.
Despite recent weakness in consumer spending, the American consumer has fueled this sector. The S&P 500 Consumer Discretionary Index (S5COND) has gained 11.0% through Monday, per S&P Dow Jones Indices. All these figures exclude dividends.
The top five performers among consumer discretionary stocks in the S&P 500 during this period were: casino operator Wynn Resorts Ltd. (WYNN), up 50.8%, toy and game maker Hasbro Inc. (HAS), up 45.4%, fashion accessories maker Coach Inc. (COH), up 37.0%, online travel booking service Expedia Inc. (EXPE), up 36.1%, and vehicle components manufacturer Delphi Automotive PLC (DLPH), up 35.8%.
Wynn operates casinos in Las Vegas and Macau, China, and is developing a large casino and resort in the Boston suburb of Everett, Massachusetts, scheduled for completion in 2019. Wynn posted impressive first quarter results, beating EPS estimates by 67.6% and increasing year-over-year revenue by about 48%. Analysts are calling for full year EPS to rise by 40.4% in 2017 and by 23.5% in 2018, per Yahoo! Finance. (For more, see also: After Wynn Resorts Earnings, Should You Buy Casino Stocks?)
Hasbro’s well-known brand names include Monopoly, Nerf, Play-Doh, Transformers and My Little Pony, among others. The company is enjoying strong growth in its traditional board game business, and is introducing a direct-to-consumer subscription service that should boost sales even more. Additionally, Hasbro is making a foray into digital gaming services that is drawing positive notice. (For more, see also: Hasbro Launches Subscription Service to Tap Board Game Fad.)
Coach is best known as a maker of women’s handbags, belts and other leather goods, but also markets other accessories, clothing, luggage and fragrances, mainly for women. In response to a challenging environment for brick-and-mortar retailers, Coach is diversifying its product offerings through acquisitions of other upscale brands. (For more, see also: Coach’s Long-term Prospects Look Bright with Kate Spade Buyout.)
Expedia is enjoying strong multi-year growth along two key dimensions. Over the past three years, sales have grown at a compound annual rate of almost 23%. Additionally, profit margins are vey high at around 74%. (For more, see also: Expedia Stock Has Room to Soar.)
Delphi is a leading global supplier of components to vehicle manufacturers, particularly in the areas of electrical systems, electronics and power trains. First quarter EPS were 17% above the year-ago figure, and beat the consensus estimate by 9%. Delphi also is becoming a key player in the development of self-driving vehicles. (For more, see also: Delphi Automotive Tops Q1 Earnings, Reveals Spinoff.)