In this piece, we will look at the best consumer cyclical stocks to buy according to analysts.
While most media attention is focused on AI and data center stocks, reports about the American consumer present a mixed picture. Ahead of the Thanksgiving Holiday, data from the Commerce Department revealed that retail sales in the US grew by 0.2% in September in a slowdown of the 0.6% August growth figure. Some of the weakest sectors were clothing retailers, electronics and appliances, and car dealerships, with each sector representing dips of 0.7%, 0.5%, and 0.3%, respectively.
The Commerce Department’s data matched figures released by the Conference Board. The Board’s Consumer Confidence Index revealed that its November reading sat at 88.7 points, for a sharp drop of 6.8 points over October’s 95.5 reading. Additionally, consumers weren’t optimistic for the future either, as the Expectations Index sat at 63.2 points in an 8.6 point drop over October’s reading.
EY’s chief economist, Greg Daco, noted the stock market’s divide and its potential impact on consumer spending in an appearance on Bloomberg Radio on November 22nd. When asked about his opinions regarding the ‘K-shaped’ economy, which represents different outcomes and patterns of the affluent and less-affluent individuals and families, Daco commented that “we’re seeing a greater degree of polarization in terms of the different drivers of economic activity.” Daco also referred to his ‘A-Pillar’ economy, which is driven by AI, Asset Prices, and the Affluent, and warned that “there are downside risks if any of one these pillars starts breaking apart.”
According to him, optimism in AI and capital investment were supporting economic activity, which, when combined with rising valuations, supported a wealth effect that was “gradually supporting more spending by more affluent consumers.” However, as the less affluent were “less invested in the stock market,” any doubts about AI’s prospects or pullbacks in AI investment might lead to “a pullback in consumer spending activity,” he added.
Photo by Paolo Resteghini on Unsplash
Our Methodology
For our list of 12 Best Consumer Cyclical Stocks to Buy According to Analysts, we used a screener to shortlist the stocks catering to the consumer cyclical sector. We then sorted the list according to analyst upside potential and a rating of Buy or higher. We also added the hedge fund sentiment for each stock, as of Q3 2025, which was sourced from Insider Monkey’s database.
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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
12. Carvana Co. (NYSE:CVNA)
Number of Hedge Fund Holders: 109
Average Upside Potential as of November 28: 12.00%
Carvana Co. (NYSE:CVNA) is one of the most well-known car retailers in the US. Its business model is fully online, and during the third quarter, the firm’s retail sales were 155.941 vehicles.
As of November 28th, out of the 24 analyst recommendations for Carvana Co. (NYSE:CVNA), seven were a Strong Buy, while 10 were Buy. Out of the remaining seven, six analysts had a Hold rating, while one had rated the stock at Underperform. The average share price target was $419.45.
One recent coverage for Carvana Co. (NYSE:CVNA) came from Wedbush on November 24th. It was striking as Wedbush upgraded the stock to Outperform and upgraded the share price target to $400 from an earlier $380. As part of the report, Wedbush outlined that it saw Carvana Co. (NYSE:CVNA)’s recent selloff as excessive. The firm also brought forward its estimate of the car retailer crossing CarMax in quarterly used-unit volumes. Wedbush now expects Carvana Co. (NYSE:CVNA) to cross CarMax in Q4 2026 earlier than the previous estimate that saw around mid-2027.
Carvana Co. (NYSE:CVNA)’s shares have gained 79% year-to-date. The firm presented at the Wells Fargo TMT Summit on November 14th. It outlined that it was targeting to sell three million vehicles annually over the next five to 10 years. Carvana Co. (NYSE:CVNA) had shared a similar estimate during its third-quarter earnings call. CEO Ernest Garcia remarked that “Q3 was another large step on the path to achieving our current goal of selling 3 million cars at a 13.5% adjusted EBITDA margin in the next 5 to 10 years.”
During the call, analysts also questioned Carvana Co. (NYSE:CVNA)’s management about the estimate. One question came from Needham’s Chris Pierece, who asked “how you came up with it, what drives it and what could pull it forward or push it back?”
In response, CEO Garcia remarked:
“Sure. I would say at a high level, the time lines we provided there were 5 to 10 years, which correspond to 2030 to 2035. And I think the fast end of that is approximately 40% compounded growth and the slow end of that is approximately 20% compounded growth. I think as a general matter, we view that as largely driven by our ability to continue to execute is probably the biggest determinant of that. There’s a lot of work that has to be done across the entire business to make sure that we’re buying cars, reconditioning cars, delivering cars to customer long leg and last mile, handling customer questions and just scaling the entirety of the business. So I think there’s a lot of work in there. And I think our execution is the primary driver that we think will dictate when we achieve that goal.”
11. The Home Depot, Inc. (NYSE:HD)
Number of Hedge Fund Holders: 104
Average Upside Potential as of November 28: 13.01%
The Home Depot, Inc. (NYSE:HD) is one of the largest home improvement retailers in the US. The firm operates more than 2,300 stores across the US, Canada, and Mexico.
As of November 28th, 19 out of the 37 analyst recommendations for The Home Depot, Inc. (NYSE:HD) were a Buy. Out of the remaining 18, 14 were a Hold while four were a Strong Buy. The average share price target for The Home Depot, Inc. (NYSE:HD) was 403.36.
One recent analyst coverage for The Home Depot, Inc. (NYSE:HD)’s shares came on November 21st from Citigroup. It kept the shares’ rating on Buy but reduced the share price target to $407 from $422. The shift came after the firm’s latest earnings report, which saw it cut its full-year adjusted earnings forecast to a 5% dip from an earlier 2% drop. For its fiscal third quarter, The Home Depot, Inc. (NYSE:HD) reported $41.35 billion in revenue and $3.74 in adjusted earnings per share. While the firm’s revenue beat analyst estimates of $41.10 billion, the earnings missed their estimate of $3.84.
Some reasons management attributed to the profit cut were lower consumer spending, weaker demand for home improvement products, and fewer storms. During the call, after UBS’ Michael Lasser asked The Home Depot, Inc. (NYSE:HD)’s management whether home improvement demand could improve without lower interest rates or an uptick in housing activity, CEO Edward Decker replied:
“We’ve talked about all the different drivers of demand in our segment. And there are leads and lags in all of them, and we’ve clearly called out over time the most statistically relevant would be home price appreciation and household formation and housing turnover. Those three right now are pressured for sure. But we also know that we’ve more than worked our way through the pull forward of the COVID years. And there are many industry reports and calculations of now under spend per household. So on one hand, we’re looking at something as much as a $50 billion cumulative under spend in normal repair and remodel activity in U.S. housing. On the other hand, we have less turnover and home price appreciation.
So that tension is going to have to balance itself out as we work through the rest of this year and into next year. But fundamentally, our job is to put great value propositions in front of the customer and take share in any environment. So can The Home Depot grow? The answer is yes. Will the industry have some shorter-term pressures with turnover in home price? Yes, as well.”
10. AutoZone, Inc. (NYSE:AZO)
Number of Hedge Fund Holders: 60
Average Upside Potential as of November 28: 15.8%
AutoZone, Inc. (NYSE:AZO) is one of the largest aftermarket auto parts distributors in America. The firm has more than 7,000 stores globally, with the bulk of these located in the US.
As of November 28, 19 out of 27 analysts had a Buy rating for AutoZone, Inc. (NYSE:AZO)’s shares, while four had a Strong Buy rating. The average share price target was $4,579.13.
One recent analyst action for AutoZone, Inc. (NYSE:AZO)’s shares came on November 13th when Goldman Sachs upgraded the stock to Buy from Neutral and increased the share price target to $4,262 from $4,090. As part of its coverage, the bank cited AutoZone, Inc. (NYSE:AZO)’s scale advantages over other retailers and noted the strong performance of the firm’s do-it-yourself market. AutoZone, Inc. (NYSE:AZO)’s scale tied into the strong DIY performance as the firm’s extensive presence allowed it to grow its market share, according to the bank.
The analyst upgrade came after AutoZone, Inc. (NYSE:AZO)’s fiscal fourth-quarter earnings. As part of the results, the retailer outlined that its domestic DIY same-store sales grew by 2.2%. During the earnings call, CFO Jamere Jackson also commented that AutoZone, Inc. (NYSE:AZO) was gaining domestic DIY market share. Yet, at the same time, CEO Philip Daniele, while responding to a question from Jefferies’ Bret Jordan about discretionary merchandise segments, tied DIY sales to lower-income consumers:
“At some point, you know, it really spiked up, and I’m going back several years, you know, coming out of the pandemic, the discretionary categories really spiked up. And then they’ve really declined over the last two years. As we said, it’s the best growth we’ve had over the last couple of months since ’23. So I’d say it’s probably bottomed out and slowly started to gain some traction. There’s a little bit of green shoots, but I would say it’s a little early to say. I still think that, you know, the lower-end consumer is still under quite a bit of pressure. And, you know, this is mostly on the DIY sales floor side of the business.”
9. Group 1 Automotive, Inc. (NYSE:GPI)
Number of Hedge Fund Holders: 40
Average Upside Potential as of November 28: 16.97%
Group 1 Automotive, Inc. (NYSE:GPI) is an automotive retailer with a presence in the US and UK. The firm has 259 dealerships across the US and UK, out of which 146 are in the US.
As of November 28th, out of the 10 analyst recommendations covering Group 1 Automotive, Inc. (NYSE:GPI), two were a Strong Buy, while four were a Buy and four were Hold. The average share price target was $469.11. One such rating for Group 1 Automotive, Inc. (NYSE:GPI) came on November 12th from Barclays.
It set an Overweight rating on the stock and a $510 share price target. The coverage came as part of the bank’s broader coverage of automotive firms, which saw the bank set Overweight ratings for firms including AutoNation and Lithia Motors. In its note, Barclays noted that Group 1 Automotive, Inc. (NYSE:GPI) was trading at a P/E ratio below its historical average and that of its peers in the dealership industry.
Group 1 Automotive, Inc. (NYSE:GPI)’s fiscal third-quarter earnings saw it report $10.45 in EPS, which fell short of analyst estimates of $10.81. During the earnings call, analysts questioned the firm about the softening of US luxury car sales, its decision to exit its UK Jaguar Land Rover dealerships, and the potential of partnering up with Chinese brands in the UK.
In response, management outlined that while there was some inventory buildup for luxury US cars in Q3, the situation will become clearer in Q4. As for working with Chinese brands, Group 1 Automotive, Inc. (NYSE:GPI)’s management stressed that it was holding discussions and would decide based on whether the retail model suited shareholder interests.
8. Domino’s Pizza, Inc. (NASDAQ:DPZ)
Number of Hedge Fund Holders: 52
Average Upside Potential as of November 28: 18.35%
Domino’s Pizza, Inc. (NASDAQ:DPZ) is one of the most well-known pizza chains in the US. It is also one of the biggest global pizza chains and boasts a presence in more than 90 countries with more than 14,600 stores.
As of November 28th, out of the 34 analyst recommendations for Domino’s Pizza, Inc. (NASDAQ:DPZ), 19 were a Buy while 12 were Hold. The remaining three were a Sell, an Underperform, and a Strong Buy. The average share price target for Domino’s Pizza, Inc. (NASDAQ:DPZ) was $496.65.
A recent analyst rating for Domino’s Pizza, Inc. (NASDAQ:DPZ) came on November 24th, and it saw Piper Sandler maintain a Neutral rating and a $445 share price target. Piper Sandler’s latest comments followed a meeting with the firm’s management, following which analysts noted that management remained confident in its ability to gain market share. Yet, in a surprising turn, UK’s Domino’s Pizza CEO, Andrew Rennie, announced his departure the very next day, on November 25th. Prior to his exit, Rennie had warned that the British pizza industry was facing a supply glut and a challenging market environment.
The challenging environment also featured in Domino’s Pizza, Inc. (NASDAQ:DPZ)’s third-quarter earnings call where CFO Sandeep Reddy commented that the firm’s “third quarter financial results continued to be impacted by a challenging macro backdrop” but added that Domino’s Pizza, Inc. (NASDAQ:DPZ) “drove profit growth that was slightly ahead of our expectations due to our strong sales performance and the timing of investments.”
During the call, after UBS’ Dennis Geiger asked what the components of a challenging micro backdrop might be and what its impact on the business was, Reddy remained upbeat about Domino’s Pizza, Inc. (NASDAQ:DPZ) ability to gain market share in the quick service restaurant (QSR) industry:
“Yeah. No. I think as we said in the prepared remarks, we’re reiterating our 3% outlook for same-store sales in the U.S. And I think as far as we’re concerned, we’ve been talking about the macro environment being a key factor all year. So this is not new. But I think what we did want to point out was we’ve definitely been seeing a slowing across restaurant industry sales. To start our fourth quarter, and that’s just a factor that’s out there. But as far as we’re concerned, we are expecting to continue to gain share against the QSR pizza industry. We’ve done so really well so far this year. And we expect to continue to do that in Q4. So in terms of initiatives, we actually are running Best Deal Ever, as you know, right now.”
7. Lithia Motors, Inc. (NYSE:LAD)
Number of Hedge Fund Holders: 45
Average Upside Potential as of November 28: 23.61%
Lithia Motors, Inc. (NYSE:LAD) is an American vehicle retailer that sells new and old vehicles. It is one of the largest retailers of its kind, with 298 outlets in the US and 151 in the UK
As of November 28th, 8 out of 15 analyst recommendations for Lithia Motors, Inc. (NYSE:LAD) were a Buy. Out of the remaining seven, four were a Strong Buy while three were a Hold. The average share price target for Lithia Motors, Inc. (NYSE:LAD) was $394.13.
Evercore ISI maintained Lithia Motors, Inc. (NYSE:LAD) stock at Outperform and raised the share price target to $500 from $440 on November 24th. The price target came as a part of Evercore’s reevaluation of the broader automotive sector through which it sees a 20% upside in 2026.
Lithia Motors, Inc. (NYSE:LAD) ended October 2025 with a major announcement as it added three Hyundai dealerships to its portfolio. Through the deal, the firm expects to generate $440 million in annualized revenue. Like other car retailers, the firm is also operating in a different environment with regard to electric vehicles. Additionally, during the firm’s third-quarter earnings call, management discussed its beliefs regarding 2026 auto demand and the impact of tariffs on the car industry.
When asked by Stephens’ Jeffry Lick about the tariff impact, Lithia Motors, Inc. (NYSE:LAD) CEO Bryan DeBoer commented:
“The good news is I believe that the Koreans and the Japanese are responding to the market nicely. They are not raising prices. I think our increases in two of the main import Japanese brands talking about 250 to $300 increases. On their main product lines like CRVs RAV fours, and so on. And these cars are now full hybrids or they’re plug-in hybrids that are just better and more economical cars. So on an affordability level for a consumer, I don’t think tariffs I think tariffs can be overcome by better gas mileage and lower bills at the pump or electrification.”
For his complete remarks, you can check out the Q3 earnings call transcript.
6. Ferrari N.V. (NYSE:RACE)
Number of Hedge Fund Holders: 46
Average Upside Potential as of November 28: 23.74%
Ferrari N.V. (NYSE:RACE) is one of the most well-known luxury car brands in the world. Its shares are down by 5.9% year-to-date as they struggle to recover from a major 21% dip in October. The stock fell after what media reports described as a lackluster €9 billion revenue target for 2030.
As of November 28th, out of 14 analyst recommendations for Ferrari N.V. (NYSE:RACE)’s stock, eight were a Buy, while three were a Strong Buy. The remaining three were a Hold. The average share price target for Ferrari N.V. (NYSE:RACE)’s stock was $484.92.
One recent analyst action on Ferrari N.V. (NYSE:RACE)’s shares came in the form of a Buy rating from Goldman Sachs after the bank initiated coverage and set a $454 (€391) share price target on November 24th. As part of its coverage, the bank outlined that Ferrari N.V. (NYSE:RACE) could experience an average selling price growth of 14% and 4% for the years 2026 and 2027. Goldman’s optimism about the firm was based on Ferrari N.V. (NYSE:RACE)’s pricey vehicles such as the 296 Versione Speciale and the F80 hypercar.
Pricing power was a part of the discussion during Ferrari N.V. (NYSE:RACE)’s third-quarter earnings call, as after GAM’s Flavio Cereda asked management whether they expected pricing power to continue in the future, CEO Benedetto Vigna replied:
“Thank you, Flavio, for the question. It’s not at all an end. Actually, we feel confident that with all the innovation that we have to delight our clients, we do not see any weakening in our pricing power. We will continue to offer Flavio, car with a different positioning. All of them will benefit of the pricing power because this pricing power, just to be clear, is not coming because we will just increase the price for the same, let me say, product as it is. No, we will make richer and richer innovative, more and more innovative with the product so that by delighting the client, we are confident that we will keep our pricing power. And this is what we are working on. And this is the goal of all the money that we invest in R&D, in innovation with all the team here.”
4. Royal Caribbean Cruises Ltd. (NYSE:RCL)
Number of Hedge Fund Holders: 47
Average Upside Potential as of November 28: 26.23%
Royal Caribbean Cruises Ltd. (NYSE:RCL) is a cruise ship company that is one of the largest in its industry. The firm’s ships enable travellers to go to 61 countries, as well as a private island.
As of November 28th, 16 out of the 27 analyst recommendations for Royal Caribbean Cruises Ltd. (NYSE:RCL) were a Buy. Out of the remaining 11, six were Hold, and four were a Strong Buy and one was a Sell. The average share price target for Royal Caribbean Cruises Ltd. (NYSE:RCL) is $336.08.
Recent analyst commentary for Royal Caribbean Cruises Ltd. (NYSE:RCL) came on November 26th after analysts from Bernstein remarked that cruise ship prices in November appeared to have softened over October. Higher supply was the reason behind the softness, they explained, with Royal Caribbean Cruises Ltd. (NYSE:RCL)’s group-wide prices dropping by 5% year-over-year. The firm had reiterated an Outperform rating and a $360 share price target for the cruise ship operator on October 31st. Another recent analyst action for the stock occurred on November 18th after Wells Fargo initiated coverage to set an Outperform rating and a $320 share price target. Calling Royal Caribbean Cruises Ltd. (NYSE:RCL) a “Top Idea,” the bank mentioned the firm’s cost controls and assumed a 2027 earnings 17x forward multiple.
One key aspect of Bernstein’s coverage was oversupply in the Caribbean region that caused the price weakness. When asked about it by Goldman Sachs’ Elizabeth Dove during the third-quarter earnings call, here’s what Royal Caribbean Cruises Ltd. (NYSE:RCL)’s CEO Jason Liberty said:
“Yes. Well, I mean, it’s — I think it’s well known. It’s been known for some time that there is an increase in supply in the Caribbean, of course, Caribbean has been working incredibly well for us. And so not surprised that there’s been a supply increase there. But it’s a very manageable increase in supply. So we’ve seen it — it’s been a little bit more — a little bit more promotional in the Caribbean activities. But for us, I think, because of our differentiated assets with our ships and our destinations and our ability to kind of keep our guests inside of our ecosystem, and we’re seeing a draw from other ecosystems coming to our ecosystem that we’re able to not only manage that demand, but we’re able to see our guests pay up to experience our delivery.”
4. Booking Holdings Inc. (NASDAQ:BKNG)
Number of Hedge Fund Holders: 95
Average Upside Potential as of November 28: 26.30%
Booking Holdings Inc. (NASDAQ:BKNG) is a software firm that provides travel services through its web and other platforms. It is one of the largest firms of its kind with more than four million properties in its portfolio.
As of November 28th, 23 out of 39 analyst recommendations for Booking Holdings Inc. (NASDAQ:BKNG) were a Buy. Among the remaining 16, five were a Strong Buy while 11 were Hold. The average share price target for Booking Holdings Inc. (NASDAQ:BKNG) was $6,207.21
Booking Holdings Inc. (NASDAQ:BKNG)’s shares were upgraded to Buy from Neutral by Bank of America on November 24th. While the bank kept a $6,000 share price target, it outlined that the impact on the shares from worries about competition from AI was overdone. BofA added that Booking Holdings Inc. (NASDAQ:BKNG) stood to benefit from its close relationships with hospitality firms, as it allowed it to retain users on its platform and enjoy an advantage over AI platforms through offering better deals.
Better deals, margins, and metrics such as revenue per available room are key determinants of Booking Holdings Inc. (NASDAQ:BKNG)’s performance. The firm’s latest earnings report and the associated earnings call saw management and analysts discuss them. For instance, during the earnings call, after JPMorgan’s Douglas Anmuth asked management about their thoughts on the traffic shift from direct and Google to AI platforms such as ChatGPT, CFO Ewout Steenbergen remarked:
“Yes, maybe a couple of points, Doug. Just you also asked about the economics and some of the data. So first of all, what we are seeing in terms of traditional search that we still see volume growth. So travel clicks that are coming to us from traditional search are still going up year-over-year. That, of course, might change over time, but I think that is an important data point. The other is the number of leads that we’re receiving from large language models relatively small, but it is growing. And probably over time, these 2 worlds might become more hybrid because we are seeing, of course, more AI being built into browsers at this point in time. What are we measuring in terms of impact, ultimately, faster search, better conversion, lower cancellation rates and higher customer satisfaction, very early signals we’re having around it. But overall, very encouraged we are with what we are seeing at this moment.”
3. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 332
Average Upside Potential as of November 28: 26.33%
eCommerce giant Amazon.com, Inc. (NASDAQ:AMZN) is also a key player in the AI ecosystem. The firm has a partnership with AI firm Anthropic, and it dabbles in AI through its AWS cloud business and in-house AI chips.
As of November 28th, 48 out of the 67 analyst recommendations for Amazon.com, Inc. (NASDAQ:AMZN) were a Buy. Out of the remaining 19, 16 were a Strong Buy while three were a Hold. The average share price target for Amazon.com, Inc. (NASDAQ:AMZN) was $294.65.
Two recent analyst coverages for Amazon.com, Inc. (NASDAQ:AMZN)’s shares came on November 25th and November 18th. On the 25th, Rosenblatt maintained a Buy rating and a $305 share price target for the firm. After the firm’s third-quarter earnings, Rosenblatt had upgraded the price target to $305 from $298 on the back of growth in the AWS cloud business. Amazon.com, Inc. (NASDAQ:AMZN)’s AWS was a key concern ahead of the earnings, as the stock fell in August after the firm’s second-quarter earnings report revealed a 17.5% which was lower than Alphabet and Microsoft’s 32% and 39% growth rates. On November 18th, Rothschild Redburn downgraded the stock to Neutral from Buy on the back of worries about the return from heavy spending for the generational AI capacity buildout.
During Amazon.com, Inc. (NASDAQ:AMZN)’s third-quarter earnings call, BofA’s Justin Post asked management about AWS’ capacity growth. In response, CEO Andy Jassy commented:
“On the capacity side, we brought in quite a bit of capacity, as I mentioned in my opening comments, 3.8 gigawatts of capacity in the last year with another gigawatt plus coming in the fourth quarter and we expect to double our overall capacity by the end of 2027. So we’re bringing in quite a bit of capacity today, overall in the industry, maybe the bottleneck is power. I think at some point, it may move to chips, but we’re bringing in quite a bit of capacity. And as fast as we’re bringing in right now, we are monetizing it.”
2. MercadoLibre, Inc. (NASDAQ:MELI)
Number of Hedge Fund Holders: 109
Average Upside Potential as of November 28: 37.43%
MercadoLibre, Inc. (NASDAQ:MELI) is a Uruguayan eCommerce firm. It is one of the largest firms of its kind in Latin America and boasts 94 million unique buyers on its platform.
As of November 28th, 18 out of the 26 analyst recommendations for MercadoLibre, Inc. (NASDAQ:MELI)’s shares were a Buy. Out of the remaining eight, five were a Strong Buy while three were a Hold. The average analyst share price target for MercadoLibre, Inc. (NASDAQ:MELI) is $2,847.
One recent analyst coverage for MercadoLibre, Inc. (NASDAQ:MELI)’s shares came on November 24th. It saw UBS maintain a Buy rating for the stock but cut the share price target to $2,900 from $3,000. The firm had previously reiterated a $3,000 price target for MercadoLibre, Inc. (NASDAQ:MELI) on October 22nd and set the $3,000 target on June 2nd. As part of its October coverage, the bank had pointed towards the firm’s upcoming third-quarter results to determine whether it was able to maintain robust margins and growth amidst rising competition. The price target had been raised to $3,000 following MercadoLibre, Inc. (NASDAQ:MELI)’s first-quarter earnings.
MercadoLibre, Inc. (NASDAQ:MELI)’s third-quarter earnings saw its $421 million net income miss analyst estimates of $481 million. During the call, when XP’s Pedro Caravina asked management about OpenAI’s move into eCommerce, here is what CEO Ariel Szarfsztejn said:
“So before jumping into OpenAI, let me say that we are extremely excited about the potential of agentic AI to enhance discovery, service and productivity within our ecosystem. There are several examples of things that we are doing on that regard. We just launched our own seller assistant, which is a conversational tool that gives sellers personalized advice and recommendations on how to manage data activity in our platform. In fintech, as you probably know, we just launched our first AI assistant that can help our users with a wide range of tasks like making or scheduling money transfer through a conversational platform, asking for questions on the user’s operation and so on. But this is the first step of many to come for Mercado Pago and for MercadoLibre.
I think to the specifics of your question, the key message there is that we need to continue to focus ourselves in building the best agentic experience within our platform, and that will give us optionality on what to do next and how to move forward. I think it’s early to make comments on OpenAI and their partnership with Etsy, Shopify, and so on. We need to understand how this will develop in the long run, what role agentic AI will play in the relationship with consumers. And eventually, decide if there’s something different that we need to do for sure. We need to put the technology in place in order to have an agentic experience in MercadoLibre and in Mercado Pago in the near term.”
1. Flutter Entertainment plc (NYSE:FLUT)
Number of Hedge Fund Holders: 95
Average Upside Potential as of November 28: 47.31%
Flutter Entertainment plc (NYSE:FLUT) is a software technology company that offers online betting and other services. Its leading service FanDuel is one of the largest sports betting apps in the US and has a user base of more than 12 million users.
As of November 28th, 19 out of 27 analyst recommendations for Flutter Entertainment plc (NYSE:FLUT) were a Buy. Out of the remaining eight, six were a Strong Buy while two were a Hold. The average share price target for Flutter Entertainment plc (NYSE:FLUT)’s shares is $307.59.
A fresh analyst report from Citi on November 29th lowered Flutter Entertainment plc (NYSE:FLUT)’s share price target to $320 from $340 and kept a Buy rating on the shares, The Fly reported. At the heart of the upgrade was the firm’s tussle with the British government after UK finance minister Rachel Reeves announced that the online gaming tax would rise from 21% to 40%. As the tax rate was increased, Citi noted that the clarity after the announcement came after Flutter Entertainment plc (NYSE:FLUT) had suffered from uncertainty regarding the tax rates. The tax rate concern was at the center of analyst coverage ahead of Reeves’ announcement, with UBS cutting the share price target to $340 from $360 on November 20th as it commented that the stock could re-rate after the announcement as focus returns on its fundamentals.
Flutter Entertainment plc (NYSE:FLUT)’s tax rates were also on UBS analyst Ben Shelley’s mind during the firm’s third-quarter earnings call. Shelley’s question revolved around wager fees in Illinois, and he asked management about the impact on player behavior and the firm’s strategy for future potential tax hikes. In response, Flutter Entertainment plc (NYSE:FLUT)’s CFO, Rob Coldrake, remarked:
“Yes. Hi, Ben. I can pick up on Illinois. So obviously, with the structure that was introduced in Illinois, as you’d expect, we’re seeing a reduction in the number of bets there. But increasing handle per bet. When we look to the September data, Illinois is definitely behaving in line with other states, so we saw no impact on our Q3 numbers. However, we do still kind of monitor this very closely, we’re looking at the market data closely at the start of Q4 and what that may or may not mean. When you take a step back and approach this higher level, we definitely feel that this is another lever or tool that we’ve got in our armory to potentially mitigate taxes in high-tax jurisdictions moving forward. We’re hopeful that the regulatory landscape potentially accelerates with some of the prediction developments as well as we discussed earlier.
But yes, this is certainly something that we’ll have in our toolkit moving forward and we’ll consider elsewhere where appropriate.”
While we acknowledge the potential of FLUT to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than FLUT and that has 100x upside potential, check out our report about this cheapest AI stock.
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