3 Consumer Discretionary Stocks to Buy in a Divided Economy

May 01, 2025 at 08:00 AM EDT

Runner at sunset

According to many economists, low to middle-income consumers are strapped and taking a break from spending as they reduce the debt they accumulated on credit cards. Another group of consumers continues to spend but does so selectively.

This highlights the reality of a divided economy where investors must stay focused and avoid getting distracted by alarming headlines. While the news can often feel overwhelming or contradictory, what ultimately matters are the results. Despite the prevailing uncertainty in the market, many companies continue to deliver strong revenue and earnings growth.

That’s the case with the three consumer discretionary stocks in this article. Each of these stocks caters to a more affluent consumer. These consumers will still have discretionary income to put into goods and services. Analysts agree, which is what you’ll see in the respective price targets for these stocks.

Tapestry Looks Solid, But Wait for Earnings to Confirm

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Tapestry Inc. (NYSE: TPR) is known for its luxury accessories and lifestyle products under the Coach, Kate Spade, and Stuart Weitzman brands. Critics will point to the company’s 2.4% compounded annual sales growth rate as unimpressive.

That may be true. However, Tapestry delivered record earnings per share of $2 in its second quarter earnings report for fiscal year 2025. One reason that may be overlooked is that the company produced a net paydown yield of 38% in the last 12 months.

At a time of economic uncertainty, companies with solid balance sheets are ones to watch. Analysts have a Moderate Buy rating on TPR stock with a consensus price target of 12% upside. That includes several analysts who have lowered their price targets on the stock, but those price targets are above the $78 consensus price.

With 12% stock price growth and a dividend that yields about 2%, TPR looks like a solid buy. However, Tapestry’s last earnings report came before the Trump administration announced its tariff policy. With the company reporting earnings in early May, investors may want to hear the company’s guidance before deciding on the stock.

Will Investors Continue Running Toward On Holding Stock?

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Another retail name to watch is On Holding AG (NYSE: ONON). The company develops and distributes high-end footwear, apparel, and accessories, particularly for high-performance runners.

A distinguishing attribute of the company’s business model is that over 30% of the materials used in its top-selling styles come from recycled or renewable sources. This makes it a key company in the circular economy, which is appealing to millennials and Gen-Z consumers.

On Holding has been growing its top line sequentially and year-over-year (YOY), and that pattern is expected to continue in 2025. However, the company’s profit performance has been spottier, with a pattern of beating one quarter and missing the next.

Even with a double beat in its last earnings report in March, ONON stock is down over 13% in 2025. That is likely due to concerns over the country’s exposure to China in the ongoing tariff war.

However, the stock is up about 7% in April, which has generally been a dreadful month for stocks. Analysts continue to be bullish on the stock, with a $58.77 consensus price target, which would be a 23% increase.

Viking Holdings Could Be Ready to Set Sail

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Viking Holdings Ltd. (NYSE: VIK) is a newcomer to the market, having just gone public in 2024. The company is known for its luxury cruises aboard its longships.

Viking’s business model is designed for the sophisticated traveler. It features ships with no casinos and no passengers under 18. Another key feature is that all the company’s ships within a specific category (e.g., river ships, ocean ships) are identical.

This simplifies the booking process, as passengers can focus on itineraries rather than metrics like ship age, etc.

Investors who buy stocks within their first year of going public should expect volatility. That's been true of VIK stock, but overall, it’s been smooth sailing. The stock is up nearly 50% since it launched, despite being down about 6% in 2025.

The cruise line industry, in general, is seen as a fairly tariff-proof business. In February, Viking said it was 88% booked for 2025. Furthermore, the company didn’t expect any weakness in the market to cause passengers to cancel their trips.

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3 Consumer Discretionary Stocks to Buy in a Divided Economy

Tapestry Looks Solid, But Wait for Earnings to Confirm

Will Investors Continue Running Toward On Holding Stock?

Viking Holdings Could Be Ready to Set Sail

Where Should You Invest $1,000 Right Now?

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