Consumer stocks poised for recovery in 2025 News ad

This is a case where investors may be better off investing in industry ETFs rather than individual stocks. That’s because while many of the industry’s biggest names are participating in the current rally, they still have some catching up to do.

The good news is that 2025 is shaping up to be a good year for stocks overall. If consumer confidence leads to higher earnings, discretionary dollars could start to fall. In this scenario, investors have several stocks that fell in 2024 but appear poised to get back in step with consumers. Here are three names worth keeping an eye on.

The fundamentals of this athleisure giant are the same

Lululemon Athletics today

Lululemon Athletica Inc. logo
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Lululemon Athletics

$387.36 -1.97 (-0.51%)

(As of 10:27 a.m. ET)

52 week range
$226.01

$516.39

P/E ratio
27.97

Target price
$377.63

Despite growing by more than 57% in the three months ended December 11, 2024, Lululemon Athletics Inc. NASDAQ: LULU shares are still down more than 21% for the year. However, as of this writing, the market is trading at around $400 per share, and it appears the market has done its job of setting more reasonable expectations for LULU stock.

Some stock discrepancies in the US and slowing growth in China have been blamed for the drop in stock prices. Both of these statements are true, but even though US comparable sales fell 2% year-over-year over the last two quarters, the company still posted higher revenue and earnings year over year in each of the last four blocks.

But what might have been good enough a couple of years ago is not good enough in 2024. And once the sell-off began, investors didn’t need a reason to look for other opportunities. However, with the company projecting full-year earnings of around $16 and a forward price-to-earnings ratio of around 28x, the stock appears undervalued with a price target of around $451, which looks reasonable.

There is still room to get into CROX shares

Crocs today

Crocs, Inc. logo
$112.61 -0.33 (-0.29%)

(As of 10:15 a.m. ET)

52 week range
$85.71

$165.32

P/E ratio
8.17

Target price
US$148.80

Crocs Inc. NASDAQ: CROCS The stock is up about 19% so far in 2024, but unlike other consumer discretionary stocks, shares of the iconic shoe company are down about 13% over the past three months. And it’s a continuation of a trend that started earlier this year.

As with Lululemon, the issue weighing on the stock is not related to declining revenues and earnings. The company continues to lead in revenue and profit year on year. However, at the midpoint of the company’s fourth-quarter guidance, earnings per share (EPS) for the full year will be $12.87. Combine that with a forward P/E of 8.62 and you get a price of around $110, which is in line with where the stock is trading.

However, analysts have been bidding CROX shares higher since its quarterly earnings report in October. This is likely due to the company’s dual priorities of paying down debt and repurchasing shares. Regarding the latter, the company has already repurchased $1.1 million worth of shares in 2024. and it has $549 million remaining under its existing buyout authorization.

YETI shares make a great gift for yourself

Yeti today

YETI Holdings, Inc. logo
$44.00 -0.19 (-0.43%)

(As of 10:28 a.m. ET)

52 week range
$33.41

$54.15

P/E ratio
18.88

Target price
$45.46

Yeti Holdings Inc. NYSE:YETI is a premium brand known for its iconic refrigerators and drinkware. The stock has only been publicly traded since 2019, but it’s notable because the company offered the right products at the right time as many consumers discovered (or tolerated) a love for the outdoors in 2020 and 2021.

However, fueled by investor optimism and market sentiment, often referred to as “animal spirits”, YETI’s share price has risen beyond its fundamentals. While revenue and profit remain strong compared to last year, such rapid growth was unsustainable following the boom of 2020 and 2021.

However, the stock is still expected to fall 13% in 2024, despite rising 19.7% over the past three months. At $44.80 per share at market close on Dec. 11, YETI stock is within the consensus average. However, the company’s earnings forecast and forward P/E suggest growth of about 10%. However, this takes into account the company’s plans to increase revenue by 9% for the full year 2024. This may be too little. And those profits could increase if the company goes ahead with its plans to repurchase about $200 million of its shares.

Before you consider YETI, you should hear this.

MarketBeat tracks Wall Street’s top-rated and best-performing analysts daily and the stocks they recommend to their clients. MarketBeat identified five stocks that top analysts were quietly telling their clients to buy now, before the broader market caught on… and YETI wasn’t on the list.

While YETI currently has an analyst rating of Hold, the top-ranked analysts think these five stocks are Strong Buys.

View five stocks here

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