How to layout the consumer sector of US stocks? UBS Group AG releases its top picks, including PepsiCo, Inc.(PEP.US) and Peloton(PTON.US).

UBS Group AG recently released its preferred stock list in the consumer sector, selecting 7 stocks with differentiated investment value based on exclusive or unique data sources. The specific recommendations are as follows: PepsiCo, Inc. Cola "We believe that in the next 12 to 18 months, PepsiCo, Inc. Cola (PEP.US) will demonstrate significant improvement potential, being one of the few large essential consumer goods companies with both defensive attributes and valuation expansion space. It is expected that by the second half of 2026, the company will recover to 'meet algorithm expectations' growth trend, with full-year earnings per share expected to achieve high single-digit growth in 2026. Overall, among all recommended stocks, PepsiCo, Inc. Cola's risk-return ratio is highly attractive." Smucker "Our analysis shows that due to the good growth trend in the segment categories to which it belongs, coupled with the pricing power in the coffee business sector, Smucker (SJM.US) will achieve mid-single-digit organic growth, which is sufficient to counter the continued pressure from competitor Hostess (TWNKW.US). We predict that its organic growth rate will reach 5.6%, higher than the market's general expectation of 5.5%. From a profit standpoint, cost savings effectiveness, potential pricing space, and offline channel advantages will pave the way for the company to achieve stable long-term earnings per share growth, ultimately possibly surpassing current market expectations." Albertsons Companies, Inc. Class A "We believe that Albertsons Companies, Inc. Class A's (ACI.US) stock price correction is excessive and does not reflect its potential upside. Currently, the company has overcome the disturbances caused by the merger plan with Kroger Co. (KR.US). Of note is that its pharmacy business has achieved double-digit growth for 15 consecutive quarters, and pharmacy users are often one of the highest-value customer groups for Albertsons Companies, Inc. Class A. In addition, the company is increasing investments in pricing strategies, which is expected to further drive same-store sales growth in the grocery business." Dutch Bros "We believe that Dutch Bros (BROS.US) still has room for further growth in its stock price. The factors supporting this assessment include: the brand's store expansion speed is leading in the industry, and its sales and store traffic growth momentum is expected to continue until the second half of 2025 and 2026, with a series of attractive 'catalyst events' to secure this momentum. In the high-growth category of coffee (with a compound annual growth rate of sales of around 10% from 2021 to 2024), we expect Dutch Bros to continue to increase market share and achieve revenue growth of over 20%. This growth will be driven by strong consumer brand recognition, as well as a series of growth-sustaining factors, including highly competitive new products, efficient marketing activities, mobile ordering services, operational efficiency improvements, and the launch of food products in 2026." Ulta Beauty "Under the leadership of the new CEO, Ulta Beauty (ULTA.US) has demonstrated strong execution capabilities, significantly improved internal operational efficiency, and enjoys a favorable competitive environment - evidenced by the accelerated growth rate of same-store sales in the second quarter of 2024. In the second half of the year, the same-store sales comparison base that the company faces is relatively mild, coupled with a rich plan for new product launches, which will support maintaining growth momentum and outperforming the market. For the 2024 fiscal year, margin improvement is the core growth opportunity: we expect the growth rate of sales, general and administrative expenses to slow down, which will drive upward revisions in the company's profit expectations." Under Armour "We believe that Under Armour (ONON.US) continues to focus on product innovation, improving sports performance, signing athletes and event partnerships, expanding direct-to-consumer (DTC) models, and sticking to high-end full-price brand positioning, which will help it achieve industry-leading sales growth and exceed profit margin expectations. In addition, compared to most clothing and home textile companies, Under Armour has a stronger advantage in dealing with tariff issues." Peloton "We give Peloton (PTON.US) a 'buy' rating with a target price of $11, based on the following reasons: 1) Benefiting from revenue growth and cost optimization, there is potential upside in EBITDA expected for 2026; 2) core fundamental indicators are showing positive trends; 3) the risk-return ratio is attractive - the current stock trades at a P/E ratio (EBITDA multiple) of about 6-7 times, and cash flow is in a turning point of rebound. It is worth noting that the inflection point of subscription user growth is a key driver for its valuation expansion, which requires the company to improve the trajectory of subscription user growth even in the face of user loss risks from possible price increases during peak consumption seasons."