The Consumer Stocks Nobody Wanted

The consumer has been one of the weaker areas of the market in 2026.

That's not exactly breaking news...

Discretionary stocks have been under pressure, staples have been a mess, and investors have had very little patience for companies tied to weaker household spending, slower traffic, or margin pressure.

But Wednesday’s earnings tape gave us something worth paying attention to.

General Mills $GIS, Nike $NKE, FactSet $FDS, and Constellation Brands $STZ all reported earnings, and three of the four were rewarded with positive reactions.

And the two names that really stood out to us were General Mills and Nike.

Both stocks have been beaten to a pulp, but yesterday marked a significant shift in earnings sentiment. 

*Click the image to enlarge it

Following a big double beat, General Mills rallied 8.5% with a reaction score of 3.30. 

This is the company behind Cheerios, Betty Crocker, Pillsbury, Nature Valley, Old El Paso, Häagen-Dazs, Blue Buffalo, and plenty of other brands sitting in pantries all over America.

GIS has been in a brutal drawdown, falling from roughly $90 a few years ago to almost $30 earlier this year.

And recently, the stock undercut its late-2018 low near $36.50, which looked like the beginning of another ugly leg lower.

But instead of collapsing, buyers stepped in and turned the breakdown into a potential bear trap.

And it happened with authority...

GIS just rallied 8.5% for its best earnings reaction of the 21st century.

The fundamental story is still messy, but it's improving at the margins.

General Mills reported 13% YoY operating profit growth.

And management said it's shifting from price investment toward innovation, renovation, packaging, brand communication, and product benefits that matter to today’s consumer.

In plain English, they spent the past year trying to fix the value problem.

Now they're trying to make the brands more exciting again.

That includes better-for-you products, bolder flavors, indulgent snacks, and pet food offerings, while also targeting $3 billion in cumulative cost savings by fiscal 2030.

The consumer is still under pressure, category growth is still slow, and the full-year numbers were disappointing.

But stocks bottom before the headlines get pretty.

And when a broken chart prints its best earnings reaction in decades, we always want to take a closer look.

If GIS holds above $36.50, we expect price to squeeze higher over the coming days and weeks.

Now let’s talk about Nike.

This is another consumer name that has been absolutely destroyed.

Nike is one of the most iconic brands in the world, and the stock has still fallen nearly 80% from its 2021 peak.

But after being punished for two consecutive earnings reports, Nike finally caught a bid on Wednesday.

Following a big double beat, the stock rallied 4.9% and snapped its two-quarter beatdown streak.

In other words, yesterday was a significant shift in earnings sentiment. 

The technicals for Nike are still damaged, but momentum has been improving beneath the surface.

While price was making lower lows earlier this year, the 14-day RSI was making higher lows. That is what we call a bullish momentum divergence.

In plain English, it means sellers are still pushing price lower, but they are doing it with less force.

That doesn't mean Nike is fixed, but it does mean the stock is finally showing signs of stabilization.

And yesterday's earnings reaction confirms that something may be changing.

Fundamentally, Nike still has work to do.

In their latest report, total revenues declined 1% YoY, which is not the kind of top-line growth we want to see from a world-class brand.

But management is trying to clean up the business through its “Win Now” priorities, rebuild wholesale relationships, simplify the operating model, and refocus the company around sport.

They also highlighted five consecutive quarters of double-digit growth in Nike Running, with roughly $1 billion added to that business over the period.

Nike still has a broken chart, slowing sales, and a lot to prove.

But the earnings sentiment just turned positive, momentum is diverging in the right direction, and the stock is finally trying to carve out a tradable low.

And that brings us to our next Beat Report Pitch Meeting.

Earlier this month, we held our first-ever public Beat Report Pitch Meeting. 

These are the meetings we usually hold internally, where our Beat Team brings their highest-conviction trade ideas to Steve Strazza and debates them in real time.

For the first time, we pulled back the curtain and let members watch the process LIVE earlier this month.

And because of the overwhelming amount of positive feedback we've received, we're doing it again on Monday.

If you want access to the next pitch meeting, our current watchlist, and the next trade alert we send to members, join Beat Report today.

We hope to see you there!

Thank you for reading,

-The Beat Team

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