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Quarter-End Insights

Consumer Cyclical Picks for a Slower-Growth World

Amid global uncertainty, consumer cyclical companies with moats will fare the best, in our opinion.

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  • Despite some global economic uncertainty, consumer cyclical companies with economic moats thanks to brand, technology, or product differentiation are likely to outperform their less competitive peers.
  • The consumer cyclical sector looks fairly valued on the whole, but several sectors and individual companies offer compelling opportunities.     
  • U.S. retail spending continued to tick up at a low-single-digit pace through the second quarter, and European demand appears to be enjoying stable and increasing trends.
  • Consumers' tastes are becoming increasingly discerning, benefiting companies with differentiated products and economic moats, making it more difficult for outperformance of no-moat companies.
  • After a weather-plagued first quarter and subsequent recovery of demand, inventory should be in decent shape for apparel and home improvement retailers.


R.J. Hottovy does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.