By Teresa Rivas

If it feels like a different world since the pandemic, that's because it has been -- for many of the companies consumers know best. Investors interested in consumer stocks have had to adapt as well.

"The Consumer sector has undergone a significant transformation in the post-Covid period, driven by shifting demand patterns, inflationary pressures, supply chain disruptions, and evolving consumer behaviors," writes UBS analyst Erica Smith. "Analyzing performance after 2020 reveals a clear divergence between companies that adapted successfully and those that did not."

Some of the biggest winners over the past five years, on a total shareholder return compound annual growth rate basis, might be surprising. Department-store operator Dillard's taking the top spot, followed by Coach owner Tapestry and meme-stock darling GameStop. The list also includes big players like Walmart, Costco Wholesale, and TJX Cos.

No matter their focus however, the outperformers share a few post-pandmeic characteristics, Smith notes, including higher cash flow return on investment, sustained growth, and an ability to exceed expectations.

By contrast the underperformers -- a diverse group from Etsy to Caesars Entertainment, and Target -- often entered the pandemic with these catalysts but couldn't sustain them amid rising competition and a changing landscape. Many have since posted disappointing growth, weaker returns, and earnings misses.

Using the metrics that have worked in recent years, Smith compiled a list of companies that could be the next wave of outperformers, including Amazon.com, Philip Morris, PepsiCo, TJX Cos. Booking Holdings, Marriott, Monster Beverage, Carvana, O'Reilly Automotive, Garmin and Yum Brands.

   She specifically highlights Barron's pick   Viking Holdings, quoting her colleague Robin Farley who says that "Viking is unique in its focus on the luxury traveler, the segment which has been outgrowing all other tiers on land as well as at sea -- the company has gone from strength to strength, with its long booking curve and fortress balance sheet helping it navigate near-term challenges." 

Elsewhere, from a more qualitative perspective, the UBS consumer team published its list of favorite stocks for each of eight industries.

Its top food and beverage picks are General Mills and Coca-Cola, respectively, while BJ's Wholesale Club Holdings is their pick for food retailers and Dutch Bros for restaurants. UBS is also bullish on a Target turnaround. On Holding is their favorite specialty retailer, and Garage owner Groupe Dynamite is their small-cap pick. Life Time Group is the best positioned among fitness stocks, they think.

If nothing else, it pays to be picky in the consumer space. Both the State Street SPDR S&P Retail exchange-traded fund and the State Street Consumer Discretionary Select Sector SPDR ETF are lower since the start of the year, while the S&P 500 is up more than 10%.

Of course, consumer stocks are hardly alone in that regard. The index is at new highs even as market breadth remains weak, meaning more constituents are declining than advancing. The analysts at SentimenTrader call it a "Weekend at Bernie's" rally, "propped up almost entirely by flows into a handful of mega-cap tech and semiconductor leaders, while the broader market rots beneath the surface."

That doesn't portend an imminent crash, but it does raise the question how long a rally supported by just a handful of stocks can really last. Whenever investors do get interested in non-tech names again, the strongest consumer stocks may be positioned to shine.

Write to Teresa Rivas at teresa.rivas@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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June 03, 2026 14:40 ET (18:40 GMT)

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