Top 8 Consumer Stocks to Watch in 2025 with Price Targets and Growth Potential
Discover Morgan Stanley's top 8 consumer stocks poised to lead the market in 2025, focusing on defensive staples and strong consumer spending sectors driving the U.S. economy.
Morgan Stanley has spotlighted 8 standout consumer stocks that their analysts believe will outperform in the late economic cycle, as consumer spending continues to be the backbone of the U.S. economy. Despite market uncertainties driven by trade tensions, elections, and economic shifts, these stocks offer defensive strength and promising growth.
Their high-conviction picks include Coca-Cola Co. (KO), Lowe's Companies Inc. (LOW), Procter & Gamble Co. (PG), McDonald's Corp. (MCD), Mondelez International Inc. (MDLZ), Nike Inc. (NKE), Penn National Gaming Inc. (PENN), and Philip Morris International Inc. (PM).
Key Insights
- Morgan Stanley favors defensive consumer staples stocks for stability.
- Consumer staples sub-sectors rank among the most resilient in uncertain markets.
- Selected consumer stocks show strong growth outlooks backed by strategic initiatives.
Investor Highlights
Among these, five stocks are Morgan Stanley’s top picks in distinct consumer categories: Coca-Cola leads U.S. beverages, Mondelez dominates U.S. food, Penn National excels in gaming, Philip Morris stands out in tobacco, and Procter & Gamble is a leader in household products.
Out of 86 industries analyzed for defensive qualities, four top-ranking sectors belong to consumer staples: food products (1st), beverages (3rd), household products (5th), and food & staples retailing (6th).
Here’s a brief overview of three key picks within these defensive sectors:
Coca-Cola (KO): Morgan Stanley’s top U.S. beverage pick, with a price target of $60, suggesting a 10.7% upside from early December 2023. Growth drivers include superior revenue expansion compared to peers, enhanced pricing power, innovation, and emerging market momentum. Expected catalysts include a turnaround in EPS growth in 2024 and improved free cash flow conversion.
Mondelez International (MDLZ): Leading U.S. food stock with a $60 price target, indicating an 11.5% potential gain. The company benefits from sustainable revenue acceleration, successful strategic shifts, increased reinvestment, and a favorable geographic and category footprint. Its valuation is expected to align more closely with multinational consumer packaged goods firms rather than slower-growing domestic food companies.
Procter & Gamble (PG): The top pick in U.S. household products, with a $134 price target, implying a 7.5% upside. Strengths include robust revenue growth across its portfolio, market share gains despite higher pricing, and improving gross margins projected to exceed consensus estimates. This positions PG for faster revenue and earnings growth than its competitors, justifying a premium valuation.
Outlook and Risks
While Morgan Stanley favors the defensive nature of consumer staples amid a challenging earnings environment, they caution about potential risks. Price increases and margin expansions may slow due to easing commodity costs. Additionally, some segments, especially household products and food & staples retailing, appear overvalued relative to historical norms.
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