UBS recently released its list of top picks in the consumer sector, selecting seven stocks with differentiated investment value based on exclusive and proprietary data sources.
PepsiCo (PEP) is regarded as one of the few large consumer staples companies that combines defensive attributes with valuation expansion potential. UBS believes it has significant improvement potential over the next 12 to 18 months and is expected to return to expected growth levels by the second half of 2026, with high single-digit earnings per share growth for the full year. The risk-reward ratio is highly attractive.
The J.M. Smucker Co. (SJM) is expected to achieve 5.6% organic growth, slightly above market expectations, thanks to its pricing power in the coffee segment and strong growth in sub-categories. Cost savings, potential price increases, and advantages in offline channels will collectively support its steady earnings per share growth, with performance likely exceeding expectations.
Albertsons (ACI) is currently considered overly corrected, with its upside potential not fully reflected. As the disruptions from its merger with Kroger gradually subside, its pharmacy business, which has maintained double-digit growth for 15 consecutive quarters, demonstrates strong customer loyalty. The high lifetime value of pharmacy customers and investments in pricing strategies are expected to drive further growth in same-store sales.
Dutch Bros (BROS) operates in the high-growth coffee industry and is expected to continue gaining market share, achieving over 20% revenue growth. Its store expansion pace leads the industry, and the growth momentum in sales and customer traffic is likely to continue into 2026. Brand recognition, new products, mobile ordering, and improved operational efficiency are key drivers.
Ulta Beauty (ULTA) has significantly improved operational efficiency under its new CEO, with accelerated same-store sales growth. Facing a more moderate comparative baseline in the second half of the year, coupled with multiple new product launches, the company is expected to maintain growth momentum. The core opportunity for fiscal 2024 lies in margin improvement, as slower growth in sales and administrative expenses is expected to drive earnings revisions upward.
On (ONON) adheres to a premium full-price positioning through strategies such as product innovation, performance enhancements, and athlete collaborations, positioning it to achieve industry-leading sales growth and exceed margin expectations. The company also holds a relative advantage in managing tariff-related challenges.
Peloton (PTON) received a “Buy” rating with a target price of $11. UBS is optimistic about its EBITDA upside potential by 2026, citing positive trends in core underlying metrics and an attractive current valuation. Whether the number of subscription users can reach an inflection point will be key to driving valuation expansion.
