Higher Consumer Confidence Could Benefit These 3 Retail Stocks

Key Points

• Consumer confidence booms unexpectedly, creating a boom scenario for these retail stocks in the coming months.
• The macro backdrop aligns to create double-digit upside with very little downside risk.
• Wall Street is buying, and analysts are boosting ratings for today's list.

As the market stays near its all-time highs, understanding and breaking down the fundamental data becomes more important than ever for investors. With this in mind, there are typically two sets of data that truly drive the view and performance of the different sectors of the economy: first, the business data, and then the consumer data to balance the supply and demand equation.

Focusing on the consumer, one of the most widely followed indicators just turned green unexpectedly, driving interest and potential opportunities into the retail sector.

With consumer confidence now higher than expected despite all the economic uncertainty that is happening today, investors should focus their energy (and capital) on the names that could benefit the most from this higher reading.

Some of these names include companies like Nike Inc. NYSE: NKE, On Holding NYSE: ONON, and even Ross Stores Inc. NASDAQ: ROST for the coming months. Each with a different value, growth, and scale proposition, these stocks could be the first to see added buying pressure off this bullish report.

Some of these opportunities give investors a chance to profit before 2025 is over.

Nike Breaks Away From Its Slump

After all of the tariff uncertainty in the retail space, especially with companies like Nike, whose raw materials and manufacturing are mostly focused in the Asian region, the sentiment has finally shifted for this brand across market participants.

If consumers feel confident, even in a tight economic environment, one of the few certainties in the market is that Nike sales will likely benefit from this, as the brand is nearly a rare commodity in fashion and sports. With this in mind, it seems that the market was ahead of the curve this time around, as it bid Nike stock up by 40% over the past quarter.

Now trading at 86% of its 52-week high, Nike is in an official bull market with no signs of slowing down. This recent momentum and macro backdrop have also sparked new optimism from those on Wall Street, as J.P. Morgan Chase analyst Matthew Boss boosted the stock’s rating to an Overweight, up from a previous Neutral.

This ratings change also came coupled with a new $93 per share valuation, significantly up from the previous $64 view and calling for as much as 20% upside potential from where the stock trades today, not to mention a new 52-week high to be made.

On Holding Stock: The Growth Story

If Nike represents the scalability and predictable play in retail, then On Holding represents the growth aspect of this potential portfolio, a much-needed balance for most investors today. However, growth does not only come from the stock’s price action but rather from the underlying fundamentals, and that’s where investors can begin their research in this company.

Wall Street analysts expect to see up to 17 cents in earnings per share (EPS) for the fourth quarter of 2025 in On Holding, in other words, a 70% increase from today’s reported 10 cents in EPS. As most investors already know, where EPS growth goes, so does the stock’s performance.

The broader market is also well aligned with this outlook, as it is now willing to pay up to 74x for the company’s earnings in a price-to-earnings (P/E) ratio that stands greatly above the retail sector’s 30x average valuation.

Of course, there are those who are uncomfortable paying up for a company, forgetting that the market will always pay for growth.

According to Raymond James analyst Rick Patel, this stock could see $66 per share before breaking out further, giving investors a chance to see up to 30% upside in a growth story that may as well overdeliver.

Smart Money Sees Value in Ross Stores Stock

Now, for the value side of the equation, with Ross Stores, stock investors can find value not only in the company's current valuation but also in the business model itself. In today’s tight inflation and economic environment, it is clear that any name that can provide a value proposition to its customers is set to do very well in the coming months.

That is where Ross Stores becomes attractive, enough for institutional investors from Fenimore Asset Management to initiate a position worth up to $205 million as of late July 2025, a vote of confidence justified by the recently bullish consumer data.

Just as with On Holding, the market is willing to put Ross Stores in premium territory through a price-to-book (P/B) multiple of 8.4x compared to the rest of the retail sector’s 5.6x. Paying up for a company’s book is a sign of confidence in the balance sheet itself, which shows the stable nature of Ross Stores to balance the scale and growth stories seen in Nike and On Holding.