Hasbro

Is this a consumer discretionary name worth buying?

In terms of sector blow ups, 2023 was the year of financials. As we enter Q4 of 2024, looking back at the summer months of last year banks both big and small were able to be had for <10x next twelve months earnings. JPM was at 7, BAC 6, some small cap banks were at 3 or 4 NTM PE, insurance might be the best preforming sector if semiconductors didn’t exist. That massive out performance was yours for the taking if you held your nose, dug through the trash, bought what you deemed good deals, and then waited. The last point is key. Because sometimes holding on, when things get bleak, is harder than just chasing momentum, but if done correctly, a lot more profitable. The most money is made when things go from terrible to just bad.

The easiest and safest way to find stuff in the garbage bin that should revert is to look at the sectors that are massively underperforming and buy a barbell of high quality very well-known names in that sector, as well as stuff a little further out on the risk curve which will rip higher if that sector gets some love.

As I’ve talked about in the past, I think 2024’s sector to buy is Consumer discretionary/cyclical. Here’s a list of the top 10 holdings of XLY, the sector SPDR etf.

Not exactly a list of names setting anyone’s book on fire. Amazon has traded mostly sideways since their impressive Q4 2024 print in early February. Tesla is down on the year as I write this (though check because that stock moves). McDonald’s just had a E.coli outbreak. Bookings looked terrible until about a month ago, Nike and Starbucks have been hit hard this year and Chipotle is another name that’s been flat for the last half of year while the market has ripped.

The names on the list are all ones you know. They’re ones more on the ‘quality’ ‘lower risk’ side of the barbell, though personally I think a few of these names are extremely risky at their current levels.

Today we’re going to go deeper into this sector. To talk about my favorite name in this beaten down space, one that has been outperforming not just the XLK but the broader S&P 500 index. It’s one that I expect to continue that trend into and through 2025 as its earnings power shines though. If you’re considering putting on a discretionary basket its one you should heavily consider. That stock? Hasbro.