Investors are increasingly focusing on consumer cyclical stocks, with analysts identifying a range of top picks amid fluctuating consumer confidence and shifting retail dynamics. Recent data from the Commerce Department revealed that U.S. retail sales grew by a modest 0.2% in September 2025, following a stronger 0.6% increase in August. Notably, sectors such as clothing retailers, electronics, and car dealerships saw declines of 0.7%, 0.5%, and 0.3% respectively, highlighting a challenging environment for consumer spending.
The Conference Board’s Consumer Confidence Index also reflected a declining sentiment, falling to 88.7 points in November, down 6.8 points from the previous month. This decline indicates that consumers are wary of future economic prospects, as the Expectations Index dropped to 63.2 points, a decrease of 8.6 points from October. In light of these findings, Greg Daco, chief economist at EY, discussed the implications of a “K-shaped” economy on Bloomberg Radio. He noted that while wealthier individuals may benefit from rising asset prices and increased spending, those with less financial stability could be adversely affected.
As investors navigate this complex landscape, a selection of consumer cyclical stocks has emerged as particularly promising. The following twelve companies have been highlighted based on their analyst ratings and potential for upside.
Top Consumer Cyclical Stocks to Consider
1. Carvana Co. (NYSE:CVNA)
– Hedge Fund Holders: 109
– Average Upside Potential: 12.00%
Carvana, a leading online car retailer, reported retail sales of 155,941 vehicles in the third quarter. Analyst ratings reflect confidence, with seven Strong Buy recommendations out of 24. Following a recent upgrade by Wedbush, which increased the price target to $400, Carvana’s shares have surged 79% year-to-date. CEO Ernest Garcia expressed optimism about the company’s goal of selling three million vehicles annually over the next five to ten years.
2. The Home Depot, Inc. (NYSE:HD)
– Hedge Fund Holders: 104
– Average Upside Potential: 13.01%
The Home Depot operates over 2,300 stores in the U.S., Canada, and Mexico. Recent earnings revealed revenue of $41.35 billion, surpassing estimates, though adjusted earnings per share fell short at $3.74. Analysts remain cautious, with Citigroup reducing its price target to $407, citing lower consumer spending as a critical factor affecting performance.
3. AutoZone, Inc. (NYSE:AZO)
– Hedge Fund Holders: 60
– Average Upside Potential: 15.8%
As a leading auto parts distributor with more than 7,000 stores, AutoZone has benefited from a strong do-it-yourself market. Following a recent upgrade by Goldman Sachs, which set a target of $4,262, the stock reflects robust growth in domestic DIY sales.
4. Group 1 Automotive, Inc. (NYSE:GPI)
– Hedge Fund Holders: 40
– Average Upside Potential: 16.97%
With a presence in both the U.S. and UK, Group 1 operates 259 dealerships. Barclays recently set a price target of $510, noting that the stock trades below historical averages, indicating potential for growth despite a slowdown in luxury car sales.
5. Domino’s Pizza, Inc. (NASDAQ:DPZ)
– Hedge Fund Holders: 52
– Average Upside Potential: 18.35%
Domino’s, a major player in the global pizza market, is navigating a challenging environment. The company aims to maintain market share despite a competitive landscape, with a recent price target of $445 maintained by Piper Sandler following a promising earnings report.
Emerging Leaders in Consumer Cyclical Sector
6. Lithia Motors, Inc. (NYSE:LAD)
– Hedge Fund Holders: 45
– Average Upside Potential: 23.61%
Lithia Motors has expanded its reach with a recent acquisition of three Hyundai dealerships, expected to generate $440 million in annualized revenue. Evercore ISI has raised its price target to $500 amid expectations of strong automotive market performance.
7. Ferrari N.V. (NYSE:RACE)
– Hedge Fund Holders: 46
– Average Upside Potential: 23.74%
Despite a 5.9% year-to-date decline, Ferrari’s luxury brand remains resilient. Goldman Sachs initiated coverage with a price target of $454, emphasizing the brand’s innovation and pricing power in the luxury market.
8. Royal Caribbean Cruises Ltd. (NYSE:RCL)
– Hedge Fund Holders: 47
– Average Upside Potential: 26.23%
As a leading cruise company, Royal Caribbean offers a unique travel experience across 61 countries. Despite recent price softening due to increased supply, analysts remain optimistic, with a target of $336.08.
9. Booking Holdings Inc. (NASDAQ:BKNG)
– Hedge Fund Holders: 95
– Average Upside Potential: 26.30%
Booking Holdings continues to lead in travel services, with a wide portfolio of properties. The stock was recently upgraded to Buy by Bank of America, which highlighted its competitive advantage amid rising AI concerns.
10. Amazon.com, Inc. (NASDAQ:AMZN)
– Hedge Fund Holders: 332
– Average Upside Potential: 26.33%
Amazon remains a dominant force in eCommerce and AI, with a price target of $294.65. Recent analyst coverage indicates confidence in its AWS growth and overall market position.
11. MercadoLibre, Inc. (NASDAQ:MELI)
– Hedge Fund Holders: 109
– Average Upside Potential: 37.43%
MercadoLibre, a leading eCommerce provider in Latin America, reported a target of $2,847. The company is focused on leveraging AI to enhance user experience and maintain competitive margins.
12. Flutter Entertainment plc (NYSE:FLUT)
– Hedge Fund Holders: 95
– Average Upside Potential: 47.31%
Flutter Entertainment, a prominent player in online betting, faces regulatory challenges in the UK. Despite recent adjustments in price targets, analysts are optimistic about its long-term growth potential.
Investors are encouraged to consider these stocks carefully as they navigate the complexities of the consumer cyclical sector. The ongoing changes in consumer behavior and economic conditions will play a pivotal role in shaping the performance of these companies in the coming months.