We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
5 Big Consumer Discretionary Stocks to Buy Despite Recent Headwinds
Read MoreHide Full Article
Key Takeaways
Netflix tops five picks despite sector decline, backed by strong subscriber growth and engagement levels.
Roku gains from platform revenue growth, AI-driven recommendations, and a strong ad ecosystem shift to CTV.
Take-Two Interactive benefits from a strong pipeline like GTA VI, boosting bookings, cash flow, and margins.
The consumer discretionary sector has witnessed moderate growth in the past year, despite a strong rally in U.S. stock markets. The situation has aggravated as the sector is in the negative year to date.
Structurally, the consumer discretionary sector is growth-oriented. The share prices of these companies grow over a long time period. Growth sectors are sensitive to the movement of market interest rates and are inversely related.
Over the last two years, the Fed opted for easy monetary policies with a significant cut in the benchmark lending rate. However, market participants are uncertain about the trajectory of interest rates this year. Moreover, geopolitical conflicts and the breakout of war in the Middle East also affected growth stocks.
The chart below shows the price performance of our five picks in the past month.
Image Source: Zacks Investment Research
Netflix Inc.
Zacks Rank #2 Netflix is benefiting from its growing subscriber base, thanks to a robust localized and foreign-language content portfolio and healthy engagement levels with about two hours of viewing per member per day, indicating strong member retention.
NFLX surpassed the 325 million paid memberships milestone during the fourth quarter of 2025. The company made great progress growing advertising revenues in 2025. Ad revenues grew more than 2.5 times year over year in 2025 to more than $1.5 billion.
NFLX has set an ambitious target to double its revenues by 2030 and reach a $1 trillion market capitalization, supported by a diversified content strategy, including international programming, live events, and gaming initiatives.
In 2025, NFLX began testing new artificial intelligence (AI) tools to help advertisers create custom ads based on its intellectual property, with plans to build on this progress in 2026. The company also introduced automated workflows for ad concepts and used advanced AI models to streamline campaign planning, significantly speeding up these processes.
Netflix has an expected revenue and earnings growth rate of 13.7% and 25.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last seven days.
Ralph Lauren Corp.
Zacks Rank #2 Ralph Lauren has benefited from the execution of its “Next Great Chapter: Drive Plan” and robust financial performance. The plan focuses on brand elevation, consumer centricity and operational agility. RL’s digital transformation drives growth, with investments in personalization, mobile, omnichannel and fulfillment enhancing consumer engagement.
Retail and wholesale remain the key pillars of RL, with flagship stores, premium distribution and partnerships boosting comparable sales across North America, Europe and Asia. For fiscal 2026, RL expects revenues to increase in the high-single to low-double digits on a constant currency basis. While gross margin is likely to increase 40-80 bps, operating margin is expected to expand 100-140 bps in constant currency.
Ralph Lauren has an expected revenue and earnings growth rate of 6.5% and 11%, respectively, for the current year (ending March 2027). The Zacks Consensus Estimate for the current year’s earnings has improved 2% over the last 60 days.
Roku Inc.
Zacks Rank #1 Roku’s growth is driven by platform revenues, supported by accelerating streaming adoption and strong monetization potential from its large logged-in household base. Stable platform gross margins highlight that growth is not sacrificing profitability, while expanding ARPU remains a key upside lever.
ROKU’s diversified advertising ecosystem, including upfronts to self-serve tools, positions the company to capture shifting budgets toward connected television. ROKU’s deep integrations with major demand-side platforms and a growing subscription aggregation model strengthen engagement and recurring revenues.
ROKU has gradually enhanced this experience with AI-driven content recommendations, improved search functionality and strategic content placement. Its content discovery improvements, including AI-generated viewing recommendations and subscription-aware content details pages, are reducing cancellation rates and improving conversion.
ROKU has an expected revenue and earnings growth rate of 16.3% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 65.3% over the last 60 days.
Take-Two Interactive Software Inc.
Zacks Rank #2 Take-Two Interactive Software benefits from steady net bookings growth driven by strong engagement across core franchises and an expanding mobile portfolio, supported by a well-balanced platform mix across mobile, console and PC.
A robust release pipeline, including GTA VI and WWE 2K26 and major upcoming titles, positions TTWO to establish a higher revenue baseline and profitability. TTWO’s operating leverage is emerging as revenues scale faster than costs, boosting operating cash flow and enhancing financial flexibility. TTWO’s proactive AI adoption also supports efficiency and long-term margin potential.
Take-Two Interactive Software has an expected revenue and earnings growth rate of 37.3% and more than 100%, respectively, for the current year (ending March 2027). The Zacks Consensus Estimate for the current year’s earnings has improved 0.9% over the last 30 days.
Electronic Arts Inc.
Zacks Rank #2 Electronic Arts benefits from a strong portfolio led by its global football franchise, Battlefield and Apex Legends, which drive player engagement and monetization. This ecosystem supports EA’s recurring engagement through extra content purchases and live-service spending.
Live services remain a key revenue driver for EA, extending the lifecycle of major titles through subscriptions and in-game monetization. EA’s strong cash flow and liquidity further support shareholder returns and continued investment in core franchises and live-service expansion.
Electronic Arts has an expected revenue and earnings growth rate of 3.1% and 8.2%, respectively, for the current year (ending March 2027). The Zacks Consensus Estimate for the current year’s earnings has improved 1.4% over the last 60 days.
Zacks' 7 Best Strong Buy Stocks (New Research Report)
Valued at $99, click below to receive our just-released report
predicting the 7 stocks that will soar highest in the coming month.
View the Zacks #1 Rank List
Image: Bigstock
5 Big Consumer Discretionary Stocks to Buy Despite Recent Headwinds
Key Takeaways
The consumer discretionary sector has witnessed moderate growth in the past year, despite a strong rally in U.S. stock markets. The situation has aggravated as the sector is in the negative year to date.
Structurally, the consumer discretionary sector is growth-oriented. The share prices of these companies grow over a long time period. Growth sectors are sensitive to the movement of market interest rates and are inversely related.
Over the last two years, the Fed opted for easy monetary policies with a significant cut in the benchmark lending rate. However, market participants are uncertain about the trajectory of interest rates this year. Moreover, geopolitical conflicts and the breakout of war in the Middle East also affected growth stocks.
Despite these negatives, we have selected five consumer discretionary stocks with a favorable Zacks Rank for investment. These are: Netflix Inc. (NFLX - Free Report) , Ralph Lauren Corp. (RL - Free Report) , Roku Inc. (ROKU - Free Report) , Take-Two Interactive Software Inc. (TTWO - Free Report) and Electronic Arts Inc. (EA - Free Report) . Each of our picks currently carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks in the past month.
Image Source: Zacks Investment Research
Netflix Inc.
Zacks Rank #2 Netflix is benefiting from its growing subscriber base, thanks to a robust localized and foreign-language content portfolio and healthy engagement levels with about two hours of viewing per member per day, indicating strong member retention.
NFLX surpassed the 325 million paid memberships milestone during the fourth quarter of 2025. The company made great progress growing advertising revenues in 2025. Ad revenues grew more than 2.5 times year over year in 2025 to more than $1.5 billion.
NFLX has set an ambitious target to double its revenues by 2030 and reach a $1 trillion market capitalization, supported by a diversified content strategy, including international programming, live events, and gaming initiatives.
In 2025, NFLX began testing new artificial intelligence (AI) tools to help advertisers create custom ads based on its intellectual property, with plans to build on this progress in 2026. The company also introduced automated workflows for ad concepts and used advanced AI models to streamline campaign planning, significantly speeding up these processes.
Netflix has an expected revenue and earnings growth rate of 13.7% and 25.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last seven days.
Ralph Lauren Corp.
Zacks Rank #2 Ralph Lauren has benefited from the execution of its “Next Great Chapter: Drive Plan” and robust financial performance. The plan focuses on brand elevation, consumer centricity and operational agility. RL’s digital transformation drives growth, with investments in personalization, mobile, omnichannel and fulfillment enhancing consumer engagement.
Retail and wholesale remain the key pillars of RL, with flagship stores, premium distribution and partnerships boosting comparable sales across North America, Europe and Asia. For fiscal 2026, RL expects revenues to increase in the high-single to low-double digits on a constant currency basis. While gross margin is likely to increase 40-80 bps, operating margin is expected to expand 100-140 bps in constant currency.
Ralph Lauren has an expected revenue and earnings growth rate of 6.5% and 11%, respectively, for the current year (ending March 2027). The Zacks Consensus Estimate for the current year’s earnings has improved 2% over the last 60 days.
Roku Inc.
Zacks Rank #1 Roku’s growth is driven by platform revenues, supported by accelerating streaming adoption and strong monetization potential from its large logged-in household base. Stable platform gross margins highlight that growth is not sacrificing profitability, while expanding ARPU remains a key upside lever.
ROKU’s diversified advertising ecosystem, including upfronts to self-serve tools, positions the company to capture shifting budgets toward connected television. ROKU’s deep integrations with major demand-side platforms and a growing subscription aggregation model strengthen engagement and recurring revenues.
ROKU has gradually enhanced this experience with AI-driven content recommendations, improved search functionality and strategic content placement. Its content discovery improvements, including AI-generated viewing recommendations and subscription-aware content details pages, are reducing cancellation rates and improving conversion.
ROKU has an expected revenue and earnings growth rate of 16.3% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 65.3% over the last 60 days.
Take-Two Interactive Software Inc.
Zacks Rank #2 Take-Two Interactive Software benefits from steady net bookings growth driven by strong engagement across core franchises and an expanding mobile portfolio, supported by a well-balanced platform mix across mobile, console and PC.
A robust release pipeline, including GTA VI and WWE 2K26 and major upcoming titles, positions TTWO to establish a higher revenue baseline and profitability. TTWO’s operating leverage is emerging as revenues scale faster than costs, boosting operating cash flow and enhancing financial flexibility. TTWO’s proactive AI adoption also supports efficiency and long-term margin potential.
Take-Two Interactive Software has an expected revenue and earnings growth rate of 37.3% and more than 100%, respectively, for the current year (ending March 2027). The Zacks Consensus Estimate for the current year’s earnings has improved 0.9% over the last 30 days.
Electronic Arts Inc.
Zacks Rank #2 Electronic Arts benefits from a strong portfolio led by its global football franchise, Battlefield and Apex Legends, which drive player engagement and monetization. This ecosystem supports EA’s recurring engagement through extra content purchases and live-service spending.
Live services remain a key revenue driver for EA, extending the lifecycle of major titles through subscriptions and in-game monetization. EA’s strong cash flow and liquidity further support shareholder returns and continued investment in core franchises and live-service expansion.
Electronic Arts has an expected revenue and earnings growth rate of 3.1% and 8.2%, respectively, for the current year (ending March 2027). The Zacks Consensus Estimate for the current year’s earnings has improved 1.4% over the last 60 days.