Data from the recent Commerce Department report has highlighted mixed signals regarding the state of the American consumer ahead of the Thanksgiving Holiday. Retail sales in the United States increased by only 0.2% in September, a significant slowdown from the 0.6% growth seen in August. Sectors such as clothing, electronics and appliances, and car dealerships experienced declines of 0.7%, 0.5%, and 0.3%, respectively. This decline in consumer spending aligns with the findings of the Conference Board’s Consumer Confidence Index, which reported a sharp drop in consumer sentiment, falling to 88.7 points in November from 95.5 in October.
In light of these economic indicators, analysts have identified twelve consumer cyclical stocks that may represent worthwhile investment opportunities. While the stock market remains polarized, as noted by Greg Daco, chief economist at EY, certain stocks are positioned to benefit from the current economic landscape. Daco’s comments on Bloomberg Radio emphasized the divide between affluent and less affluent consumers, suggesting that continued investment in technology and AI could support spending among wealthier demographics.
Top Picks for Consumer Cyclical Stocks
The analysis for these twelve stocks utilized a screener to focus on the consumer cyclical sector. Stocks were then ranked based on analyst upside potential and ratings of Buy or higher. Additionally, hedge fund sentiment was included, sourced from Insider Monkey’s database.
1. **Carvana Co. (NYSE:CVNA)**
– Hedge Fund Holders: 109
– Average Upside Potential: 12.00%
Carvana has gained attention for its fully online car retail model. As of November 28, 2025, out of 24 analyst recommendations, seven were a Strong Buy and ten were rated as Buy. The average price target for the stock is $419.45. Notably, Wedbush upgraded Carvana’s rating to Outperform, citing excessive selloff in the stock price.
2. **The Home Depot, Inc. (NYSE:HD)**
– Hedge Fund Holders: 104
– Average Upside Potential: 13.01%
Operating over 2,300 stores across North America, The Home Depot has received mixed reviews. Most recent analyst coverage from Citigroup maintained a Buy rating but lowered the price target to $407, following a dip in earnings forecast due to declining consumer spending.
3. **AutoZone, Inc. (NYSE:AZO)**
– Hedge Fund Holders: 60
– Average Upside Potential: 15.8%
AutoZone’s strong market presence has prompted optimism among analysts, with 19 out of 27 recommending the stock as a Buy. Goldman Sachs upgraded AutoZone’s rating to Buy due to its robust DIY market performance.
4. **Group 1 Automotive, Inc. (NYSE:GPI)**
– Hedge Fund Holders: 40
– Average Upside Potential: 16.97%
This automotive retailer has shown resilience in the face of softening luxury car sales. Analysts noted the stock is trading below its historical average, with Barclays setting an Overweight rating and a $510 price target.
5. **Domino’s Pizza, Inc. (NASDAQ:DPZ)**
– Hedge Fund Holders: 52
– Average Upside Potential: 18.35%
Domino’s continues to dominate the pizza market, yet recent earnings reports reflect the challenges posed by a competitive environment. Despite this, analysts remain optimistic about market share growth.
6. **Lithia Motors, Inc. (NYSE:LAD)**
– Hedge Fund Holders: 45
– Average Upside Potential: 23.61%
Lithia Motors recently acquired Hyundai dealerships, which are expected to contribute significantly to revenue. Analysts are encouraged by the company’s strategic moves in the automotive sector.
7. **Ferrari N.V. (NYSE:RACE)**
– Hedge Fund Holders: 46
– Average Upside Potential: 23.74%
Despite a recent dip in share price, Ferrari remains a strong luxury brand. Analyst coverage by Goldman Sachs initiated a Buy rating, with expectations for continued pricing power amid innovation.
8. **Royal Caribbean Cruises Ltd. (NYSE:RCL)**
– Hedge Fund Holders: 47
– Average Upside Potential: 26.23%
The cruise line operator has faced challenges with price softening in the Caribbean market. Nevertheless, analysts have maintained an Outperform rating, anticipating recovery.
9. **Booking Holdings Inc. (NASDAQ:BKNG)**
– Hedge Fund Holders: 95
– Average Upside Potential: 26.30%
As a leader in travel services, Booking Holdings is positioned well to navigate competition from AI platforms. Recent upgrades have underscored the firm’s resilience and adaptability.
10. **Amazon.com, Inc. (NASDAQ:AMZN)**
– Hedge Fund Holders: 332
– Average Upside Potential: 26.33%
Amazon continues to be a key player not only in eCommerce but also in AI, with significant upside potential noted by analysts.
11. **MercadoLibre, Inc. (NASDAQ:MELI)**
– Hedge Fund Holders: 109
– Average Upside Potential: 37.43%
The Uruguayan eCommerce giant has shown strong performance metrics, although it has faced rising competition. Analysts remain cautious yet optimistic about its future growth.
12. **Flutter Entertainment plc (NYSE:FLUT)**
– Hedge Fund Holders: 95
– Average Upside Potential: 47.31%
Flutter’s leading position in the online betting industry makes it a noteworthy investment, despite recent tax concerns in the UK.
As consumer confidence remains fragile, these stocks present varied opportunities for investors looking to navigate the shifting landscape of consumer spending. The contrasting fortunes of different sectors illustrate the complexities of the current economic environment, making careful analysis essential for informed investment decisions.
