Consumer stocks struggle as shoppers pull back, while business-focused companies thrive
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Consumer-facing companies like Nike, Lululemon, Apple, Tesla, and Starbucks are struggling recently while business-facing companies are hitting record highs.
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These consumer stocks rely on discretionary spending and brand power to charge premium prices, but demand is slowing.
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Reasons include economic concerns, consumers shifting spending from goods to services, and challenges in China.
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The investment thesis hasn't changed for these high-quality companies, but near-term headwinds are leading to underperformance.
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Patient investors may see the recent weakness as a buying opportunity if they believe consumer spending and China will eventually recover.