Where to Shop in the Consumer Discretionary Sector May 12, 2021 CFRA today lowered our recommended exposure to the S&P 500 Consumer Discretionary sector to marketweight from overweight. CFRA Chief Investment Strategist Sam Stovall noted that with commodity prices, wage pressures, transportation/freight rates, and numerous other factors pressuring costs, profit margins for the sector are likely to be squeezed. In addition, Fed Chair Powell recently said it was unlikely that supplemental unemployment payments from the federal government would extend past September. CFRA thinks this could cause consumers to start to pull back on discretionary spending. Even though the sector is expected to record 2021 EPS growth of 39%, according to S&P Capital IQ’s Consensus Estimates, vs. the S&P 500’s projected 31% growth rate, the sector sports the highest absolute P/E premium of all 11 sectors, based on next 12-month EPS estimates. Finally, Stovall added that Consumer Discretionary’s nine-month relative price performance places it among the bottom four sectors.