UPDATE: The consumer cyclical stocks market is making headlines as the Morningstar US Consumer Cyclical Index has surged by 6.52% year-to-date, signaling a robust recovery as consumer spending rebounds. Investors are turning their attention to the 12 most undervalued consumer cyclical stocks identified by Morningstar’s analysts as of September 18, 2025.
This surge is crucial for investors seeking immediate opportunities in a fluctuating economy. As consumers are increasingly likely to spend on discretionary items, this list features stocks poised for significant growth.
Here are the top picks:
1. **Under Armour (UA)**: Currently trading 65% below its fair value estimate of $13.80 per share, Under Armour faces challenges but is a potential turnaround story under CEO Kevin Plank. Analysts see a possible rise in direct-to-consumer revenue to 50.6% by fiscal 2035.
2. **VF Corporation (VFC)**: At a 62% discount to its fair value of $39.50 per share, VF’s brands like Vans and The North Face are crucial players in the apparel market. The company aims to achieve $600 million in annual savings by fiscal 2028.
3. **Caesars Entertainment (CZR)**: Trading at a 57% discount to a fair value of $61, Caesars operates approximately 50 gaming properties and has realized over $1 billion in sales synergies since its merger with Eldorado.
4. **Bath & Body Works (BBWI)**: Valued 58% below its estimated fair value of $62, Bath & Body Works has a solid competitive edge, with strong brand awareness and robust sales growth projections.
5. **Lululemon Athletica (LULU)**: Lululemon is trading at a 42% discount to its fair value of $295. With plans for international expansion and product innovation, Lululemon is positioned for significant growth.
6. **Yum China (YUMC)**: The largest restaurant operator in China, Yum China is 42% undervalued compared to its fair value of $76 per share. The company is set to capture market share in a fragmented $700 billion market.
7. **CarMax (KMX)**: Trading 50% below its fair value estimate of $120, CarMax benefits from its innovative sales practices, making it a standout in the used car market.
8. **Capri Holdings (CPRI)**: Capri is seen as 52% undervalued, with a fair value estimate of $45. However, the company faces challenges, including higher tariffs and intense competition.
9. **Adient (ADNT)**: As the leading seating supplier in the auto industry, Adient is 61% undervalued, trading at a fair value of $64. Analysts believe it could benefit from the shift towards electric vehicles.
10. **Winnebago Industries (WGO)**: With a 55% discount to its fair value of $75, Winnebago is redefining itself as a leader in the outdoor lifestyle segment.
The growing interest in these stocks reflects investor confidence in a recovering economy. As consumer spending patterns evolve, these companies are well-positioned to capitalize on emerging trends.
The next steps for investors include closely monitoring these stocks and their performance in the upcoming quarters. With the market shifting and consumer habits changing, now is the time to consider these undervalued opportunities.
For more insights and updates on these consumer cyclical stocks, stay tuned as we continue to track their performance and potential in this dynamic market landscape.