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Most consumer discretionary businesses succeed or fail based on the broader economy. Over the past six months, it seems like demand trends are working against their favor as the industry has tumbled by 8.2%. This drawdown was worse than the S&P 500’s 2.9% loss.

A cautious approach is imperative when dabbling in these companies as many also lack recurring revenue characteristics and ride short-term fads. On that note, here are three consumer stocks we’re steering clear of.

The New York Times (NYT)

Market Cap: $8.52 billion

Founded in 1851, The New York Times (NYSE:NYT) is an American media organization known for its influential newspaper and expansive digital journalism platforms.

Why Should You Sell NYT?

1. Demand for its offerings was relatively low as its number of subscribers has underwhelmed

2. Projected sales growth of 6% for the next 12 months suggests sluggish demand

3. Eroding returns on capital suggest its historical profit centers are aging

At $52.06 per share, The New York Times trades at 25x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than NYT.

Adtalem (ATGE)

Market Cap: $3.96 billion

Formerly known as DeVry Education Group, Adtalem Global Education (NYSE:ATGE) is a global provider of workforce solutions and educational services.

Why Do We Think Twice About ATGE?

1. Lackluster 8.2% annual revenue growth over the last two years indicates the company is losing ground to competitors

2. Estimated sales growth of 6.4% for the next 12 months implies demand will slow from its two-year trend

3. Low returns on capital reflect management’s struggle to allocate funds effectively

Adtalem’s stock price of $106.26 implies a valuation ratio of 17.1x forward price-to-earnings. Read our free research report to see why you should think twice about including ATGE in your portfolio, it’s free.

Verizon (VZ)

Market Cap: $185.8 billion

Formed in 1984 as Bell Atlantic after the breakup of Bell System into seven companies, Verizon (NYSE:VZ) is a telecom giant providing a range of communications and internet services.

Why Is VZ Risky?

1. Customer additions have disappointed over the past two years, indicating the company’s value proposition may not be resonating

2. Free cash flow margin is forecasted to shrink by 2.2 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors

3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

Verizon is trading at $44 per share, or 9.3x forward price-to-earnings. If you’re considering VZ for your portfolio, see our FREE research report to learn more.