Consumer stocks poised for a recovery
Consumer Discretionary
AIR expects a wave of upward revisions from European corporations in the coming months as tariff clouds thin, China stabilises, infrastructure spend ramps up and European rates remain low. The missing piece is consumer confidence, which should rebound quickly if geopolitical tensions ease. Consumer names like Inditex, Stellantis, LVMH, Diageo, Kering, Adidas, Nestle and Unilever look compelling after steep share price declines, with valuations back to decade-lows. Many of these firms are pursuing clear turnaround strategies focused on FCF generation, deep efficiency gains (utilising AI) and renewed focus on core businesses - supported by a trend toward insider CEO appointments, after a decade of appointing outsiders.
Edition: 218
- 22 August, 2025
Top large cap picks for 2H25
Following a strong H1, AIR remains focused on companies that can continue gaining market share through exceptional management, innovation and cost discipline - all driving rising operating margins and FCF, even in challenging environments. The following names pass all 45 of AIR’s proprietary filters (3 layers of 15 valuation and quality criteria) and are expected to significantly outperform over the next 12 months: 1) Adidas - ranked No.1 in AIR’s quantitative system, with accelerating EBIT, margin gains and surging FCF. 2) Aena - best-in-class margins, strong traffic growth and a robust balance sheet. 3) Prysmian - a key player in energy transition and digital infrastructure with a record €40.3bn order book. AIR rates all three stocks as Strong Buys, with 50-100% upside potential.
Edition: 216
- 25 July, 2025
Adidas (ADS GR) Germany
Consumer Discretionary
Woozle’s latest channel checks reveal European LFL sales grew DD Y/Y in Q3, driven by improved product availability and heightened demand. North America saw a modest LSD LFL sales growth, with foot traffic increasing but cautious consumer spending. Asia’s LFL sales grew HSD Y/Y, fuelled by big-ticket purchases, notably footwear, despite some stock shortages. Terrace-designed footwear continued to be the top performer. Pricing and discounting have stabilised as inflation eases. Sambas and Gazelles showed no signs of slowing down with most stores reporting strong demand. ADS’ Performance line remains the best-performing apparel category.
Edition: 196
- 04 October, 2024
The sneaker / active world comes undone
Consumer Discretionary
As Nike finally takes steps forward it seems as though its neighbours are falling apart. Adidas has had a hit shoe (Samba) for a few years, yet it has not changed the momentum for the brand. Allbirds, should never have gone public, is retrenching. Kevin Plank is back at Under Armour and the CEO of Brooks is stepping down. Retail Tracker’s thesis: 1) New competition from ON / Hoka has hit several brands hard, while Alo, Gymshark and Vuori have appealed to younger men (and women) as an alternative to UA and ADS apparel. 2) Fashion has changed and with this change comes a change in footwear - for women this means a shift to loafers and ballet flats vs. sneakers. 3) We have not had a new trend in active / sport with white shoes trending for too many years. Bring back some colour and fashion!
Edition: 182
- 22 March, 2024
Puma (PUM GR) Germany
Consumer Discretionary
Firing on all cylinders - PUM has outperformed its peers over recent quarters through a successful relaunch strategy leveraging on running, performance and lifestyle wear. The company is making strong progress in building up more brand desirability and product heat. It has continued to gain momentum, thanks to its commitment to quality, innovation and the right collaborations with leading athletes and fashion icons. Despite the progress (PUM continues to be well on track for 10% EBIT margin by 2025), the valuation gap vs. adidas has widened on an EV/Sales basis to 31%, which Alex Dwek believes is unjustified. TP €80 (40% upside).
Edition: 174
- 24 November, 2023
adidas (ADIDAS AG) Antigua and Barbuda
Consumer Discretionary
The Retail Tracker has been negative on adidas with the price down 46% YTD, and 19% in the last month. Mark and Marni argue that this reflects ongoing issues in China due to COVID and backlash against the brand for sourcing cotton from the Xinjiang province, where there are humanitarian issues. Meanwhile fashion has also moved against them with consumers moving away from active and casual segments as the world opens up. On top of this the CEO has announced plans to step-down in 2023, and, the company continues to fight with Kanye West.
Edition: 145
- 30 September, 2022
Adidas (ADS GR) Germany
Consumer Discretionary
After 20 years, the company finally has a strategy that is accretive to the global duopoly (with Nike). While ADS has repeatedly tried to play NKE’s game (and most of the time ended up losing), Hedgeye’s Brian McGough explains why this is all about to change. His estimates for EBITDA and EPS are above consensus for both this year as well as the firm’s stated ‘ambitions’ for 2025. Targets 40% upside in 12 months, 75% in 2-years and a three-bagger by year-5 of his model.
Edition: 108
- 16 April, 2021