The "choppy waters" of the UK economy for the next six months means that stock selection among consumer stocks is going to be crucial for investors.
That's why a list of the best and worst of the sector has been published by analyst Wayne Brown and his colleagues at broker Panmure Liberum.
This ranges from Science in Sport PLC (AIM:SIS), Currys PLC (LSE:CURY), Next PLC (LSE:NXT) and Applied Nutrition PLC among the most liked, to worries for Greggs PLC (LSE:GRG), THG PLC (LSE:THG), Card Factory (LSE:CARD) and Frasers Group PLC (LSE:FRAS).
"The outlook is tough and macro developments in 2025 alone have made that even more challenging," said Brown, gesturing at higher gilt yields, rising unemployment, Trump tariffs and the "negative effects of the Reeves budget [that] will be felt for years".
With consumers saving due to rising concern on employment and a 30% expected rise in re-mortgaging levels this year, he said "it is hard to see how companies will grow volumes in this environment and management teams will have to work extremely hard just to hold margins".
"Cash is king and in a world of low valuations dividends and buybacks are more important in 2025 as is M&A."
Bank of England rate cuts - as seen this afternoon - will make "a significant difference to equity markets" this year, with small and mid-cap stocks due to be a "big winner" from cuts.
On share prices, Brown noted that consumer companies' share valuations are low, with free cash flow and dividend yields attractive, "so there are pockets investors can achieve some decent returns", while value traps also exist.
Science in Sport offers the greatest potential 'alpha' - ie gains above the market - as the sports nutrition outfit has returned to revenue growth, pivoted away from unprofitable relationships and is now offering "significant earnings momentum potential".
Currys, which has exposure to the Nordics, where competitive pressures have eased, is also highlighted by Brown as he believes free cash flow could double over the next two years.
Other 'buy' rated names in the sector that are "steady compounders with a value overlay" include AG Barr PLC (LSE:BAG), Hilton Food Group PLC (LSE:HFG), Cake Box Holdings PLC (AIM:CBOX), Next and Applied Nutrition.
Others that have 'hold' ratings but "could surprise" on the upside include Halfords Group PLC (LSE:HFD), where earnings downgrades have ended and the cost outlook is improving, with comparatives from last year looking "soft" for 2025; and Naked Wines PLC (AIM:WINE, OTCQX:NWINF), where the pace of revenue declines has eased and "elements of the business continue to move in the right direction".
Boohoo Group PLC (AIM:BOO), a 'buy', is due to relaunch its investment case this quarter, having rebuffed Mike Ashley's to join the board, appointed a new CEO and raised cash from a share issue and selling a London property. Brown sees a group valued at around half the sum of its parts and said "a trade buyer makes the most sense here".
Stocks "to be concerned about" or where Brown feels the City consensus is too optimistic include Greggs, Dunelm, Frasers, THG and JD Sports.
Greggs is a 'sell' for Brown, who is sceptical about the Geordie baker's chances of heating growth as much as the high single digits the market forecasts.