As consumer outperforms tech, Bridgewater 13F shows three growing consumer bets

Small U.S. consumer stocks outperformed the broad tech sector in October. But three consumer names that Bridgewater Associates, the hedge fund founded by Ray Dalio, bought more of in the second quarter lagged peers. Oninvest analyst Aldiyar Anuarbekov looks at these companies' latest financials, their upside, and what risks investors should weigh.

Bridgewater disclosed 997 positions worth a combined $24.38 billion as of June 30 in its 13F quarterly filing. Among the consumer stocks Bridgewater added to in the second quarter were automotive seating maker Adient, children’s apparel maker Carter’s, and optical retailer National Vision. Since then, Adient and Carter’s have fallen around 11% and 15%, respectively, while National Vision is little changed.

In October, S&P 500 consumer staples rose 11.6% and consumer discretionary gained 3.9%, while tech fell 6.8%, according to Nasdaq data. Investors stepped up their flows out of tech and into other sectors, including consumer stocks, amid concerns that heavy spending on AI might fail to pay off. The Democrats’ victory in the U.S. midterm elections in early November also gave the market a lift. Investors expect Democratic control of both chambers of Congress under a Republican president to limit the scope for abrupt changes in economic policy, Reuters reports.

That backdrop could favor small-cap consumer stocks that have fallen in price like Adient, Carter's, and National Vision. 

Adient (ADNT)

Adient describes itself as a global leader in automotive seating, with around 200 plants in 29 countries. It falls within the consumer discretionary sector because its business depends on vehicle sales. Its customers include Volkswagen, Ford, GM, Toyota, BMW, Audi, and China’s BYD. The management estimates that Chinese automakers will account for around 60% of Adient’s sales in China in fiscal 2026. Bridgewater increased its position in Adient by 30.6% in the second quarter. The stake was worth $6.96 million at the end of June.

In the fourth quarter of its fiscal 2026, ended September 30, Adient’s revenue rose 1% to $3.73 billion, and adjusted EBITDA was $229 million. Adient posted a net loss of $47 million versus net income of $18 million a year earlier. Full-year revenue rose 4% to $15.17 billion, and free cash flow reached $222 million. The company spent $100 million on share buybacks, and net debt stood at $1.47 billion.

For fiscal 2027, the management expects revenue to fall to $14.8-15.0 billion and adjusted EBITDA to rise to $900-925 million as operations become more efficient. It guides for free cash flow to exceed $100 million. Meanwhile, the board increased the share buyback authorization by $400 million.

BNP Paribas has an “outperform” rating on Adient at a target price of $26 per share. That implies 60% upside from Tuesday’s close. According to a BNP Paribas note seen by Oninvest, Adient trades at an enterprise value of about 3.5 times EBITDA, the lowest multiple among the retailers the bank covers. Fiscal-2027 free cash flow could amount to around 11% of its market value.

Deutsche Bank sees Adient’s heavy reliance on Europe as its biggest risk. The bank points to a shift in production to the U.S. as a positive, estimating that it will bring in around $400 million in additional revenue starting in 2027, according to a note seen by Oninvest. In November, Deutsche Bank maintained its “buy” rating but cut its TP to $23 per share from $27 per share.

Adient stock has fallen around 11% since June 30 and is down around 15% year to date. According to MarketWatch data, the stock has nine “buy” calls, three “hold” ratings, and one “underweight” recommendation. The average target price of $22.80 per share implies 40% upside from Tuesday’s close.

Carter’s (CRI)

Carter’s is North America’s largest retailer of clothing for young children, according to the company’s site. It owns the Carter’s, OshKosh B’gosh, and Skip Hop brands. Bridgewater increased its position by 40.4% in the second quarter. The stake was worth $3.6 million as of June 30. The stock is off 15.5% since then.

Carter’s net sales fell 0.7% to $752 million in the third quarter. Adjusted operating income rose 45% to $57 million, and adjusted diluted earnings climbed 39% to $1.03 per share.

After the earnings, UBS kept its “neutral” rating on Carter’s but lowered its target price to $33 per share from $38 per share. It noted that profitability exceeded expectations while sales trends were weaker than forecast. UBS took a positive view of the company’s early efforts to refresh its brands and restructure its management, but said it was too early to tell whether the business could return to sustained growth.

According to MarketWatch data, the stock has four “hold” calls, two “buy” recommendations, and one “underweight” rating. The average target price of $36.50 per share implies 6.5% upside from Tuesday’s close. The highest implies 45% upside.

National Vision (EYE)

National Vision operates more than 1,200 optical stores in 40 U.S. states and Puerto Rico. Its brands include America’s Best and Eyeglass World. Bridgewater more than quadrupled its position in National Vision, increasing it by 340%, the most of the three stocks. The stake was worth $2.22 million at the end of June.

National Vision’s second-quarter revenue rose 2.5% year over year to $498.8 million, and adjusted operating income increased to $31.6 million from $23.8 million a year earlier. The management raised its 2026 adjusted operating income guidance to $119-139 million. The company is moving away from a low-price model and focusing on customers whose insurance covers eye exams and eyeglasses. Those customers buy more expensive lenses and accounted for 42% of National Vision’s revenue in 2025, according to a Barclays report.

Roth Capital and Barclays recommend buying the stock, both with a target price of $27 per share. Jefferies has a “buy” rating at a TP of $31 per share. The stock is little changed since June 30 and is down 26% year to date. According to MarketWatch data, National Vision has eight “buy” calls versus three “hold” ratings. The average target price of $27.50 per share implies 45% upside from the last close.

In the second quarter, Bridgewater increased its stake in tire maker Goodyear by 260% and more than doubled its position in bread maker Flowers Foods. The stakes were worth $1.83 million and $2.86 million, respectively, at the end of June. Herbalife was the only company in our sample of consumer small caps with market capitalizations of up to $2 billion in which the fund cut its stake. It reduced the position by 40%. The third-quarter 13F, which Bridgewater must file with the SEC by November 16, will show how those positions changed as of the end of September.

This text is for informational purposes only and does not constitute personalized investment advice.