Key Points: Another earnings season is winding down. As a group, the 140 consumer stocks we track grew Q4 revenues by +4%. Profits grew marginally but were +6% excluding the volatile auto sector. Normalization was evident in the results. Leisure stocks are still in recovery mode. Durables are battling a post-COVID hangover, and both autos and staples are struggling to get price and volume back into balance. This report is a consumer 10-K of sorts

Key Points: Amazon might be a tech stock, but its business model is very physical. Andy Jassy recognizes that. Since he took the helm, Amazon’s employee count is basically flat, fulfillment center growth has slowed to 8%, and AWS has extracted two additional years of service from its data centers. Mr. Jassy is squeezing blood from a stone, and the aim of this report is to figure out how much opportunity remains, and what’s baked

Key Points: Spending on leisure has begun to recover, but if the category’s PCE share were to return to trend, revenues would grow +10-12% in each of the next two years. That’s more than double the pace of overall consumption, and it doesn’t even presume a recovery of sales that were lost during the pandemic. We think leisure stocks have legs.

Key Points: Over the past year, the market was convinced that higher rates would derail the consumer, but that’s not what happened. The debate is likely to get turned on its head this year – some are suggesting that falling rates will stimulate consumption, but we’re not taking the bait just yet.

Key Points: We’ve been bullish on the consumer for the past two years and at the same time, we’ve been skeptical that the low-end would be able to keep up. Stocks that cater to the low-end have indeed underperformed, and our sense is that investors have written the cohort off as a problem child. We’re starting to see reasons for optimism. Our original concern was that the low-end ran through “excess savings”, but that’s one

Key Points: The auto industry missed out on selling 9 million units over the past few years. The question we have is whether that pent-up demand will ultimately surface, or remain latent. This report assesses demand trends, supply dynamics, and credit conditions with the aim of understanding where the auto cycle is headed. We suspect that usage will factor into the replacement cycle. Miles driven are still (5)% below normal, and by our count, the

Key Points: The consumer has stood strong in the face of meaningful headwinds, and we think they’ll continue to hold up well in 2024. The uptick in credit card delinquencies seems to run counter to our thesis, so the aim of this report is to understand why delinquencies are moving in the wrong direction, and what that might mean for PCE in the year ahead. A little over a year ago, credit card balances eclipsed

Key Points: The housing market is typically the Fed’s most reliable transmission mechanism, and while housing activity has slowed markedly, the tack-on effects have yet to sink the economy or the consumer. Housing is a complex subject, and there’s no shortage of data to analyze. We focus our energies in this report on demographics, the normalization of pandemic effects, spending on home improvement, and the labor market. Housing turnover has reacted to rate hikes much

Key Points: We’ve been bullish on the consumer and that’s created a bias for discretionary stocks over staples. Staples, though, have lagged the market by ~20% over the past year, and the aim of this report is to determine whether it’s time to buy this beaten-down group or if we should continue to tread lightly. The decision to own consumer staples stocks cannot be made in a vacuum. That’s because staples often act more like

Key Points: We’re often asked when the consumer will crack. We’ve been concerned about the low-end of the income distribution for some time, but when it comes to the aggregates, we don’t see red flags waving. The bigger question we have is how a shift from nominal growth to real growth will affect the stock selection process. We’ve modified our Idea Generator to emphasize business model dynamics like asset intensity and operating leverage. Our updated