Most consumer discretionary businesses succeed or fail based on the broader economy. Lately, it seems like demand trends have worked in their favor as the industry has returned 12.3% over the past six months, outpacing S&P 500 by 1.9 percentage points.

Although these companies have produced results lately, investors must be mindful because many are fads and only a few will stand the test of time. Taking that into account, here are three consumer stocks that may face trouble.

DraftKings (DKNG)

Market Cap: $17.51 billion

Getting its start in daily fantasy sports, DraftKings (NASDAQ: DKNG) is a digital sports entertainment and gaming company.

Why Does DKNG Fall Short?

1. Sluggish trends in its monthly unique players suggest customers aren’t adopting its solutions as quickly as the company hoped
2. Historical operating margin losses point to an inefficient cost structure
3. Forecasted free cash flow margin suggests the company will fail to improve its cash conversion over the next year

At $35.16 per share, DraftKings trades at 34.3x forward P/E. If you’re considering DKNG for your portfolio, see our FREE research report to learn more.

Golden Entertainment (GDEN)

Market Cap: $719.6 million

Founded in 2001, Golden Entertainment (NASDAQ: GDEN) is a gaming company operating casinos, taverns, and distributed gaming platforms.

Why Do We Steer Clear of GDEN?

1. Annual revenue declines of 2.5% over the last five years indicate problems with its market positioning
2. Low free cash flow margin of 4.3% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

Golden Entertainment is trading at $27.49 per share, or 33.2x forward P/E. To fully understand why you should be careful with GDEN, check out our full research report (it’s free).

Deckers (DECK)

Market Cap: $15.12 billion

Established in 1973, Deckers (NYSE: DECK) is a footwear and apparel conglomerate with a portfolio of lifestyle and performance brands.

Why Should You Sell DECK?

1. Constant currency growth was below our standards over the past two years, suggesting it might need to invest in product improvements to get back on track
2. Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability
3. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 18.5% for the last two years

Deckers’s stock price of $103.89 implies a valuation ratio of 16.9x forward P/E. Dive into our free research report to see why there are better opportunities than DECK.

Stocks We Like More

If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.

Don’t wait for the next volatility shock. Check out our Top 5 Strong Momentum Stocks for this week. 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).

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