After a period of some choppy trading activity to start the year, the Dow Jones Industrial Average and S&P 500 index are currently up 14% and 16%, respectively, year to date. At this stage of the economic recovery, there are plenty of bargain stocks in the consumer discretionary sector that could benefit from the reopening.

What you want to look for are stocks that are selling for below-average valuations but still growing revenue and profits. Two stocks I would consider buying today are Dick's Sporting Goods (DKS -0.42%) and Turtle Beach (HEAR 2.49%). Here's what you need to know.

Three basketball players having fun at an outdoor basketball court.

Image source: Getty Images.

1. Dick's Sporting Goods

The sporting goods chain experienced a slump in sales at the start of the pandemic, but business took off starting in the second quarter of 2020. It's impressive that after experiencing a steep decline in consolidated same-store sales of 30% in Q1 2020, Dick's reported record revenue and earnings the very next quarter, and it hasn't looked back. 

"During this pandemic, the importance of health and fitness has accelerated and participation in socially distant, outdoor activities has increased," CEO Edward Stack said in the Q2 2020 earnings report. 

The company is building a solid brand in retail by offering a wide selection to go along with other services, such as its HiTrax baseball simulators and an omnichannel shopping experience. E-commerce now makes up 20% of total sales compared to just 13% in Q1 2019. 

Customers also love Dick's loyalty program, which has over 20 million active members. These customers make up an impressive 70% of total sales. That's a great foundation to have in the intensely competitive retail space, since loyalty programs are an effective way to drive repeat purchases.

Analysts expect Dick's to report revenue growth of 13% this year and for earnings per share to grow at a compound annual rate of about 15% over the next five years. 

The stock trades at an ultra-cheap forward price-to-earnings (P/E) ratio of 11.4 times this year's earnings estimates. That's a good value compared to the average stock in the S&P 500 index, which sells for over 22 times forward earnings. What's more, Dick's pays a dividend yield of 1.4% as well.

A video game player wearing a headset while playing a game on a PC.

Image source: Getty Images.

2. Turtle Beach

If you've got the appetite for more risk and potentially higher long-term returns, you might want to check out Turtle Beach, the leading brand of console gaming headsets. 

The company is riding the wave of new gamers that picked up the hobby during the pandemic, not to mention the demand for gaming peripherals following the launch of new consoles from Sony and Microsoft last fall. In 2020, sales rocketed 53% higher, boosting earnings per share to $2.37, more than doubling earnings of $1.04 in 2019, but the best is yet to come. 

Turtle Beach entered 2021 in a great competitive position. It reported strong sales of its Stealth 700 Gen 2 and Stealth 600 Gen 2 wireless headsets in the first quarter. With many players still waiting to buy a new console, there's plenty of demand waiting on the fence.

Management raised its full-year guidance during the first-quarter earnings report and now expects 2021 revenue to reach $385 million, representing year-over-year growth of 7%. That rate of growth looks low, but remember the company is facing a tough comparison due to the high sales volumes from 2020. Even this high single-digit growth points to a promising year, setting up Turtle Beach to accelerate its top line result in 2022.

Turtle Beach is expanding into new product categories too, including premium gaming keyboards and mice, game controllers, and microphones for the burgeoning esports and streaming markets. 

With more people expected to start gaming over the next few years, along with management's product expansion plans, Turtle Beach could be a sleeper small-cap stock.

Its forward P/E of 20 looks reasonable enough compared to most other growth stocks, but investors might be severely undervaluing its free cash flow. The shares currently trade at only 10 times trailing free cash flow, which is a bargain for this emerging brand in gaming accessories. For perspective, the leader of the industry, Logitech International, trades for over 15 times free cash flow (and has climbed as high as 25 times recently). That's a lot of room for the stock to grow.