This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Book Profits in Consumer Discretionary Stocks

NEW YORK ( TheStreet) -- The consumer discretionary sector includes companies that offer goods and services like TV services, dining out, online purchases and home-improvement products that people buy only if they can afford them.

This morning we learned that retail sales in July were stronger than expected with a gain of 0.8%. Excluding autos, retail sales rose 0.8%, and, excluding autos and gasoline, they rose 0.9%, also better than expected. This will likely give consumer discretionary stocks a boost in today's trading.

Despite weak consumer confidence since the beginning of the "Great Credit Crunch" in late 2007, several stocks in this sector have set all-time highs or multi-year highs since May. As such, Investors should consider booking profits in some of these stocks.

My benchmark for the sector is the Consumer Discretionary Sector SPDR Fund (XLY), which contains 81 stocks. I will be focusing on the top 17 stocks in the fund by index weighting, each of which is 2% or higher.

The consumer discretionary sector is undervalued by 1.3%, according to ValuEngine, which is as neutral as you can get based on fundamentals. XLY traded to an all-time high of $46.27 on May 1 after trading as low as $15.85 in March 2009, a gain of 191.9%, which is reason enough to consider booking profits.

The daily chart shows that XLY ($44.64) is positive with rising momentum (12x3x3 daily slow stochastic) reading with XLY above its 21-day, 50-day and 200-day simple moving averages at $43.92, $43.54 and $42.28, respectively. My semiannual and annual value levels lag at $39.91 and $36.46 with a weekly pivot at $44.60 and monthly and quarterly risky levels at $47.52 and $50.12.

Source: Thomson Reuters

The below table shows data from covering 17 of the 81 components of the XLY listed from top to bottom by percentage of index weight as of August 10.

Reading the Table

OV/UN Valued -- The stocks with a red number are undervalued by the percentage shown. Those with a black number are overvalued by that percentage, according to ValuEngine.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
XLY $79.25 0.70%
AAPL $92.69 -0.59%
FB $119.49 1.43%
GOOG $711.11 1.40%
TSLA $214.93 1.61%


Chart of I:DJI
DOW 17,740.63 +79.92 0.45%
S&P 500 2,057.14 +6.51 0.32%
NASDAQ 4,736.1550 +19.0610 0.40%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs