Stocks that can Win in a Fearful Market

Chipotle Mexican Grill (CMG) just watched nearly a fifth of its market value vanish overnight after warning that its young customers are pulling back hard.

On the Q3 earnings call, Chipotle’s CEO bluntly cited unemployment, increased student loan repayment, and slower real wage growth among 25–35-year-olds for a broad-based pullback in how often they eat out.

This isn’t an isolated red flag. Gen Z’s financial stress is hitting corporate revenues and it’s showing up on earnings.

Sweetgreen’s CEO echoed the sentiment, saying “the consumer is not in a great place overall,” as younger diners ditch $15 burritos and salads to eat at home.

In fact, more than half of Gen Z plan to cut restaurant spending in the next six months. Behind this retreat is a confluence of economic pressures: a weakening job market for young adults and a tidal wave of loan delinquencies that experts warn could rival or exceed the last default crisis.

Little wonder then that Chipotle’s stock is down ~50% year-to-date and Sweetgreen has collapsed by 80%.

Even fast-casual newcomer Cava (CAVA) saw its rapid growth slam on the brakes in Q3 as Gen Z customers cut back, forcing analysts to trim sales forecasts into 2026. And consider this sobering metric: Gen Z’s average credit score has dropped to 676 (the steepest decline of any generation since 2020), a slide FICO attributes largely to the resumption of student loan payments hitting younger borrowers.

 In short, the financial engine of the under-30 crowd is sputtering badly – and it’s starting to send shudders through every company that relies on their spending.

So where do investors look when market fear at large is HIGH and a demographic is under stress?

We have some ideas…

Trading Down: Value Retailers Clean Up

When wallets get tight, the crowd heads for bargains. While pricey discretionary brands stumble, off-price and discount retailers are seeing a surge of traffic.

Take TJX Companies (TJX), the parent of T.J. Maxx and Marshalls: in August it raised its profit forecast after a sales beat, noting that budget-conscious shoppers are flocking to its stores. In the latest quarter TJX saw comparable sales jump 3% and margins expand, a testament to consumers trading department-store luxuries for TJX’s treasure-hunt deals.

Dollar General (DG) similarly beat earnings expectations and hiked its guidance as Americans “looked for discounts” and bargain-hunted to stretch their paychecks.

The discount chain’s CEO credited “enhancing our value and convenience proposition” for drawing in cash-strapped customers – a strategy clearly paying off with same-store sales up 2.8% and rising.

Even more telling, Dollar General’s CFO warned that low-income shoppers face increasing pressure into year-end – yet those very pressures are driving more people through Dollar General’s doors.

Over at Dollar Tree (DLTR), the trend is just as pronounced. The retailer posted a 6.5% jump in same-store sales and revealed that wealthier households (>$100k income) made up two-thirds of its new customers last quarter.

In CEO Mike Creedon’s words, “we’re resonating very well with the customer” across the spectrum as even higher earners join the hunt for bargains. Importantly, Dollar Tree still offers deep value – 85% of its merchandise sells for $2 or less – helping lower-income shoppers stretch their budget to the next paycheck even as affluent shoppers enjoy the thrill of the hunt for deals.

The message is clear: in a fearful environment, some winners are those selling life’s staples at rock-bottom prices.

TJX, DG, and DLTR have some of the highest consumer ratings in our system right now.

But these discounters aren’t the only plays for investors – especially those looking for some fresh ideas.

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