December is always a big month for the consumer discretionary sector. 

The holiday season means a rush of spending on gifts, leading to the busiest time of year for retailers. In a normal year, the season tends to give a bump to other discretionary sectors like restaurants, travel, and entertainment as well, but with the coronavirus pandemic those bets are off.

Nonetheless, vaccines are in sight, and distributions are expected to begin later this month -- so investors shouldn't ignore the potential in "recovery stocks" either. Keep reading to see why three of the top discretionary stocks to buy in December are Target (TGT 1.55%)Disney (DIS 0.33%), and Trivago (TRVG 1.98%).

A woman in winter clothes holding up shopping bags.

Image source: Getty Images.

1. Target

Target straddles the line between consumer staples and discretionary. Like other diversified big-box chains such as Walmart and Costco, Target sells grocery and essentials like paper products and over-the-counter drugs, but the company gets a much larger percentage of its sales from discretionary products like apparel, electronics, toys, and home goods than those two peers. 

That makes Target well-positioned for both the holiday season and the recovery period, and it should be able to capture market share in areas like apparel -- many of its rivals, including Gap, have been forced to shrink their footprints, and malls may struggle to bounce back.

Additionally, Target's investments in same-day fulfillment services like Shipt, same-day delivery services, and store-based pickup options like Drive Up have also paid off immensely during the pandemic. Sales from its same-day services jumped 217% in the third quarter, and they appear to be off to a strong start in the fourth quarter, as Target reported record Cyber Monday sales. According to data from Edison Trends, Target's online sales jumped 167% in the week before Thanksgiving, so its efforts to spread out Black Friday sales seem to have paid off.

Target's business has boomed this year, and that momentum is likely to carry into the fourth quarter as well. Despite its impressive growth, the stock still looks like a steal, with a price-to-earnings ratio under 20 based on this year's estimates. Given its unique product selection and ominchannel execution, that looks like a mistake.

2. Disney

Disney needs little introduction. The company has been the first and last word in family entertainment for generations. The pandemic has a delivered a solid blow to the entertainment giant, shutting down its theme parks and the movie theaters it relies on, and even sports and video production for a period -- but the company has an ace up its sleeve with Disney+. The streaming service added more than 70 million subscribers in its first year, and has been so successful that Disney has redesigned its operating structure to prioritize Disney+.

It's a good bet that December will be a kind month for the service, which includes Disney classics, the entire Pixar, Marvel, and Star Wars libraries, and National Geographic and The Simpsons. With coronavirus cases spiking again, families around the world are looking for escape and family entertainment. Few do that better than Disney.

Similarly, the theme parks may be having a rough time this winter -- but if vaccines are in wide distribution by April, as experts like Dr. Fauci have projected, Disney's parks and resorts business is likely to see an unprecedented boom from pent-up demand this summer. Its parks are already some of the most popular travel destinations in the world, and fans who have been deprived of the experience for over a year, as well as parents who want to reward their children after a difficult time, will be eager to make the trip. You can expect a similar spike at movie theaters as well.

That all makes Disney perfectly positioned for both the transition to streaming, which has accelerated during the pandemic, and the post-pandemic reopening, which is sure to reward travel and entertainment companies that are still on their feet.

3. Trivago

Just like Disney should see a strong recovery in its travel-related businesses, online travel agencies are also likely to experience a boom -- and one stock that's poised to deliver strong growth is Trivago, the Germany-based hotel-booking specialist. 

A number of analysts are predicting that hotel prices in popular vacation destinations will surge next summer, assuming the pandemic ends, and some media outlets are encouraging travelers to book rooms for next summer now. That's likely to lead to higher room rates, and therefore higher bidding prices on apps like Trivago, which is likely to see a flood of traffic. 

As an online travel agency, most of Trivago's expenses come from marketing, and the company was easily able to scale those down during the pandemic. Though revenue plunged in its third quarter, the company still managed to report positive adjusted EBITDA, showing the business is highly scalable. In recent months, the company has also taken steps to cut fixed costs, closing regional offices and laying off staff. It's also improved its platform to align its revenue model with the interests of bidding partners, and added new features like local discovery and top ten destinations for travelers who want to take a trip but don't know where they want to go.

That all puts Trivago in good shape to post record profits next summer. Given the vaccine timeline, it may not be long before Trivago's business starts to turn around.