Looking for undervalued stocks? Here are the stocks that lost the most value in December 2024. (search description)

with someone Interest rate cut in September and it is likely that 2025 will be a standout year in terms of consumer spending. World Data Lab predicts next year’s global consumer spending will reach $3.2 trillion. This represents almost 6% growth, driven by 131 million new consumers.

If growth occurs, consumer discretionary stocks and their shareholders will benefit. This means it may be time to increase your reach into the consumer discretionary sector. Better yet, you can make a move on one of the potentially undervalued stocks featured below.

How Were These Undervalued Stocks Selected?

I selected the six undervalued stocks of December based on the following criteria:

1. Operates in the consumer discretionary sector and has a market capitalization of $5 billion or more
2. Recent growth record with revenue growth of at least 5% and earnings per share growth of at least 10%
3. Reasonable debt load with a debt/equity ratio below 1
4. Solid outlook with five-year earnings per share growth above 10%
5. Reasonable valuation with forward P/E ratio below 40 and PEG ratio below 2.25
6. Loved by analysts with average buy ratings and upside of 10% or more predicted

Don’t forget these best stock elections are concentrated in one sectortherefore, they are not intended to represent a diversified portfolio. It is offered as an option to investors who want to benefit from falling interest rates in 2025 and the positive impact this trend may have on consumer confidence.

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6 Lowest Value Stocks to Buy in December 2024

The table below includes six consumer discretionary stocks that analysts love. After the table, I will discuss each of these potentially undervalued stocks in more detail.

Table data source: Stockanaliz.com.

As you can see, these are just mid-cap and large-cap stocks. For smaller companies, see small value stock chooses. You may also want to refer to our list. Value stocks for 2024.

1.Amazon (AMZN)

1. Share price: $196.20
2. Forward P/E ratio: 33.7
3. PEG ratio: 1.6
4. Five-year EPS growth outlook: 29.5%
5. Price target: $233.63
6. Price target upside: 18.7%
7. Debt/equity: 0.61

Business Overview

Amazon generates revenue from various sources. These include online and store-based retail sales in the U.S. and worldwide, online advertising, Amazon Prime memberships, logistics and support services for retailers, and cloud computing.

Why is AMZN the Best Choice?

At least 15 analysts have upgraded their prices since Amazon’s third-quarter earnings release AMZN price targets. The main takeaway from this release was 19% quarter-over-quarter growth in the AWS cloud computing business, attributed to strong AI infrastructure demand.

AWS is growing faster and with higher margins than retail for Amazon. But e-commerce, which includes Prime memberships, still drives most of the company’s revenue. Amazon is also the market share leader in US e-commerce sales. The company accounts for 12% of gross product volume sold online worldwide. With this positioning, Amazon should benefit from measurable increases in consumer spending.

2. Alibaba Group Holding (BABA)

1. Share price: $99.39
2. Forward P/E ratio: 10.9
3. PEG ratio: 0.96
4. Five-year EPS growth outlook: 16.1%
5. Average price target: $111.93
6. Price target upside: 12.6%
7. Debt/equity: 0.23

Business Overview

Like Amazon, Alibaba operates a diversified business model that includes e-commerce sales, display advertising, logistics and delivery services, and cloud computing. The company is headquartered in China and generates more than half of its revenue from retail e-commerce in its home country.

Why is BABA the Best Choice?

At least five analysts have increased their price targets on Alibaba since the company’s last earnings release. Others reiterated their goals, while two lowered their targets.

Alibaba also increased cloud computing revenue, but growth in the company’s international digital business group was much stronger. Revenues increased by 32% compared to the previous quarter. In addition to AliExpress and Trendyol retailers, the section also includes Alibaba.com wholesale site.

One risk for Alibaba to consider is the uncertain state of the Chinese economy. Recent stimulus efforts by the Chinese government have helped China’s financial markets, but consumer confidence remains low.

3. Lululemon Athletica (LULU)

1. Share price: $319.56
2. Forward P/E ratio: 22.2
3. PEG ratio: 2.1
4. Five-year EPS growth outlook: 14.6%
5. Price target: $369.40
6. Price target upside: 15.5%
7. Debt/equity: 0.36

Business Overview

Lululemon produces athletic clothing, shoes and accessories with an emphasis on technical fabrics and functional designs. The company has deep roots in the yoga community. Products are sold directly to consumers through third-party retailers and through lululemon.com and company-owned stores.

Why is LULU the Best Choice?

Analysts’ reactions to Lululemon’s latest earnings report were mixed; target price decreases were greater than increases. While the company beat earnings expectations, it missed on revenue.

In 2024, LULU is down 37%. Investors are concerned about increased competition in the luxury athleisure space and the departure of the company’s Chief Product Officer Sun Choe. Despite these issues, analysts still see upside for the apparel maker, especially at lower transaction prices. If the company can keep its product line up-to-date and interesting, it will benefit from increased consumer confidence next year.

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4. Outdoor Deck (DECK)

1. Share price: $163.15
2. Forward P/E ratio: 27.7
3. PEG ratio: 2.1
4. Five-year EPS growth outlook: 64.1%
5. Price target: $191.06
6. Price target upside: 17.1%
7. Debt/equity: 0.12

Business Overview

Deckers Outdoor manufactures and sells lifestyle and performance footwear, apparel and accessories. Its brand portfolio includes UGG, Hoka, Teva, Koolaburra and ANHU. Products are sold to customers worldwide online and through company-owned retail stores and third-party retailers.

Why is DECK the Best Choice?

Deckers Outdoor has easily been beating analysts’ revenue and earnings expectations for several quarters in a row. Recent earnings beat EPS expectations by more than 28%, leading many analysts to raise their price targets.

DECK stock is up nearly 50% this year, thanks to double-digit revenue gains and improved gross margin. Given its five-year EPS growth outlook of 64%, many believe DECK’s impressive results will continue in the medium term.

5. Shark Ninja (SN)

1. Share price: $93.88
2. Forward P/E ratio: 27.7
3. PEG ratio: 1.3
4. Five-year EPS growth outlook: 38.1%
5. Price target: $116.39
6. Price target upside: 24.0%
7. Debt/equity: 0.63

Business Overview

SharkNinja manufactures a variety of lifestyle products under the Shark and Ninja brands. Shark products include vacuum cleaners and hair styling tools. The Ninja line includes cookware and small kitchen appliances like air fryers and beverage machines. Products are sold online and through third-party retailers.

Why is SN the Best Choice?

Like Deckers Outdoor, SharkNinja has made a habit of exceeding expectations lately. Highlights from the company’s latest earnings call included a 33% net sales increase over the prior-year quarter and a 160 basis point increase in adjusted gross margin.

SharkNinja’s success is partly down to its ability to create innovative solutions and bring products to market faster than competitors, according to JPMorgan analysts. The company regularly announces new products and product line expansions as it strives to optimize its supply chain. Investors like the balance between revenue growth and expense control. SN shares are up nearly 80% in the year.

6. Skechers USA (SKX)

1. Share price: $62.82
2. Forward P/E ratio: 13.2
3. PEG ratio: 0.6
4. Five-year EPS growth outlook: 16.1%
5. Price target: $77.73
6. Price target upside: 23.7%
7. Debt/equity: 0.43

Business Overview

Skechers designs, manufactures and sells shoes, clothing and accessories for men, women and children. The company sells to retailers, marketplaces and direct to consumers (DTC). DTC channels skechers.com and a chain of retail stores.

Why is SKX the Best Choice?

Skechers reported 15.9% sales growth and 35.5% diluted earnings per share growth in its latest earnings release. The company also increased its full-year revenue and EPS outlook. One of the negatives in the quarter was an 80 basis point decline in gross margin due to lower average selling prices.

Despite upgraded guidance and analysts’ price target increases, SKX shares haven’t moved much since the announcement in late October. Given the bullish and generally bullish outlook on the company’s five-year earnings outlook, now may be the time to buy.

In conclusion

An increase in consumer spending in 2025 could provide a nice boost to consumer discretionary stocks that already have business momentum. If you’re ready to get your share of the potential profits, retailers like Amazon and Alibaba, as well as brand portfolios like Decker Outdoors and SharkNinja purchased at the right price, can be excellent choices.

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