UBS Predicts Strong Consumer Spending Through 2026

The holiday shopping season might be winding down, but UBS believes that American consumers will keep their spending strong heading into 2026.

Analyst Jay Saul has recently laid out some top picks for apparel stocks as we approach the new year. His recommendations include well-known brands like Ralph Lauren, alongside more budget-friendly options like TJX Companies and Burlington Stores.

Despite the post-Christmas lull, Saul remains optimistic. “We think very few softline companies will miss their fourth-quarter EPS estimates,” he noted. He added that the potential for U.S. fiscal stimulus could energize sales growth in the softline market early in 2026, supporting continued momentum for these stocks through at least January.

Most of the leading apparel stocks are performing well and have the potential for more growth as we look forward. Saul suggests that the best opportunities lie with companies capable of becoming market leaders, presenting growth prospects that investors might not fully appreciate.

Here are his top ten stock picks:

• Pending: -13% since the start of the year.
• Ralph Lauren: +52%
• Gildan Activewear: +36%
• Levi Strauss & Company: +21%
• Amer Sports: +36%
• Birkenstock Holding: -27%
• TJX Companies: +29%
• Burlington Stores: +0.4%
• Deckers Outdoor Co., Ltd.: -49%
• Signet Jewelers: +5%

Ralph Lauren, emerging as the top performer, has enjoyed a rebound, driven by heightened demand from younger consumers. The brand has also started leveraging AI as a strategy for growth, all while retaining its classic appeal.

Saul noted that both Ralph Lauren and another sports retailer, On Holding, are among the best “single-play” companies currently. He feels this gives them a distinct advantage in the current market landscape.

“Companies that can operate independently don’t rely on malls or various third parties to engage consumers and stimulate sales,” he remarked. “We think these firms are likely to capture market share and emerge as industry leaders.”

The report doesn’t delve deeply into individual stocks, with most of them showing either strong performance or some struggles, like TJX and Burlington, which focus more on casual everyday wear, and Gildan and Amer Sports, which are also adapting to current demands. Meanwhile, Birkenstock, known for its casual sandals, has faced challenges despite growing popularity, partly due to rising costs driven by tariffs.