Consumer stocks are once again commanding attention on Wall Street, fueled by resilient household spending and a wave of analyst optimism. Despite ongoing inflation and global trade uncertainties, U.S. retail sales jumped 0.6% in June, well above expectations, signaling that consumer demand remains robust. “Consumers are flexing their spending muscle,” noted Gina Bolvin of Bolvin Wealth Management in a recent commentary, underscoring the strength of the American shopper even in a higher-rate environment. This trend has prompted hedge funds to rotate aggressively into consumer staples, with Goldman Sachs reporting the fastest shift into the sector in nearly two years as investors seek out stability and pricing power.
Meanwhile, analysts are highlighting opportunities even in traditionally industrial names with strong consumer exposure. Wolfe Research’s Nigel Coe, for instance, maintained a Buy rating on 3M despite acknowledging that “consumer leverage could clip down core sales guidance.” He pointed to favorable currency effects and improved cost controls as key offsets, setting a $186 price target on the stock.
Against this backdrop, we’ve identified 10 consumer-sector stocks that combine profitability, resilience, and strategic positioning. From well-established staples to innovative discretionary brands, these companies are primed to deliver steady returns, no matter how the broader economic narrative evolves.
A customer in a store, perusing the selection of consumer electronics.
Our Methodology
To identify the most profitable consumer stocks, we focused on companies operating across consumer staples, discretionary, and electronics sectors that demonstrate strong brand equity, pricing power, and consistent demand resilience. These firms span categories such as packaged foods, personal care, retail, and household goods, industries that benefit from steady consumer spending and hold the ability to navigate inflationary pressures.
From this broader universe, we applied a financial performance screen to isolate only those stocks with a trailing twelve-month (TTM) operating margin above 20%, a key indicator of profitability and operational efficiency. High margins in the consumer space often signal strong cost control, product differentiation, and customer loyalty, qualities essential for long-term value creation.
We then narrowed the list further by factoring in hedge fund sentiments as of Q1 2025. The final list represents 10 high-quality consumer stocks that combine sector leadership, financial strength, and the potential to outperform through various economic cycles.
Note: All data was recorded on July 18, 2025.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 Most Profitable Consumer Stocks to Buy Now
10. Yum! Brands, Inc. (NYSE:YUM)
TTM Operating Profit Margin: 33.11%
Number of Hedge Fund Holders: 49
Yum! Brands, Inc. (NASDAQ:YUM) is one of the most profitable consumer stocks to buy now. Yum! Brands (NYSE: YUM) got a lift this week after Morgan Stanley raised its price target on the stock to $153 from $151, reflecting cautious optimism around the company’s near-term outlook. The firm maintained its Equal Weight rating but pointed to improving industry conditions that could lead to a stronger Q2 for restaurant operators and food distributors.
With Yum! Brands currently trading at around $149, the new price target suggests a modest upside of approximately 2.7%. While not a dramatic revision, the move signals confidence in the company’s ability to navigate a mixed macro environment. In a note to investors, the firm highlighted stabilizing input costs and healthy spending patterns among middle- and upper-income consumers, which continue to support dining out behavior despite persistent policy uncertainty.
Morgan Stanley also noted that the broader restaurant space appears better positioned this quarter, as inflation pressures ease and discretionary spending remains intact in key consumer groups. For Yum!, that could translate into more consistent traffic and potentially stronger margins, particularly as it continues to focus on digital engagement, value menus, and international expansion.
Investors are now eyeing Yum!’s upcoming earnings report for confirmation that these trends are translating into tangible performance improvements, especially in high-margin segments like Taco Bell.
9. Ferrari N.V. (NYSE:RACE)
TTM Operating Profit Margin: 28.81%
Number of Hedge Fund Holders: 51
Ferrari N.V. (NYSE:RACE) is one of the most profitable consumer stocks to buy now. RBC Capital Markets analyst Tom Narayan raised his price target on Ferrari N.V. (NYSE:RACE) to $581.42 from $569.79 while reiterating a Buy rating on the stock, citing strong brand strength and continued demand resilience in the luxury auto segment. The revision, though modest, reflects confidence in Ferrari’s positioning as a premium automaker with pricing power and a loyal global customer base.
At the current market price of $507.70, the new target implies an upside potential of nearly 14.5%. RBC’s update comes amid growing investor interest in high-end consumer goods, particularly brands that have shown the ability to grow margins despite a complex macro backdrop. Narayan noted that Ferrari N.V. (NYSE:RACE) continues to benefit from limited supply, robust order books, and a steady shift toward hybrid and future EV models, all without sacrificing its exclusivity.
Ferrari’s recent financial performance has backed up the bullish outlook. The company has consistently delivered solid earnings, supported by strong ASPs (average selling prices) and disciplined cost management. Expansion plans, including a new plant in Maranello focused on electric vehicles, are seen as long-term growth drivers.
With shares already up sharply over the past year, investors are now looking to upcoming quarterly results for evidence that Ferrari can maintain its momentum and justify its premium valuation as it races toward an increasingly electrified future.
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