As Black Friday is here, investors are sifting through a mixed macroeconomic picture marked by conflicting signals on inflation and consumer resilience. While the broader market anticipates a holiday spending surge, Louis Navellier, founder and CIO of Navellier & Associates, is advocating for a highly concentrated portfolio strategy.
The ‘Two-Stock’ Retail Portfolio
In an exclusive conversation with Benzinga on the Black Friday and fourth-quarter outlook, Navellier warns that the “K-shaped” recovery is forcing a divergence in the market, leaving only a handful of investable names in retail and technology while other sectors face significant headwinds.
Despite forecasts of record holiday revenue, Navellier argues that the vast majority of the retail sector is risky due to consumer belt-tightening. He explicitly narrowed the field of “must-own” retailers to just two giants who dominate the discount space.
“The only retailers I recommend are Costco Wholesale Corp. (NASDAQ:COST) and Walmart Inc. (NYSE:WMT) due to strong same-store sales growth,” Navellier stated. “Consumers need a deal to spend money.”
This high-conviction call suggests that the “trade-down” effect is the dominant theme of Black Friday 2025. While luxury brands and middle-market mall retailers struggle for wallet share, the bulk-value proposition of Costco and Walmart offers a defensive moat against inflation-weary shoppers.
See Also: Black Friday Shopping To Decline 4%, First Drop In Four Years: Consumers Rein In 2025 Shopping
The Great AI Rotation: ‘Appliers’ And Infrastructure
Moving beyond the retail aisles, Navellier indicated that the AI trade is evolving. While Nvidia Corp. (NASDAQ:NVDA) is expected to “firm up” in the fourth quarter, the real leadership is shifting toward the companies applying the technology and those building the physical infrastructure to support it.
Navellier highlighted two specific sub-sectors poised to reassert leadership:
- AI Appliers: Companies successfully monetizing AI software, specifically Applovin Corp. (NASDAQ:APP) and Palantir Technologies Inc. (NASDAQ:PLTR).
- Data Center Infrastructure: The industrial firms providing the necessary power and cooling, including Vertiv Holdings Co. (NYSE:VRT), Emcor Group Inc. (NYSE:EME), and Comfort Systems USA Inc. (NYSE:FIX).
“These stocks will reassert their leadership, since they were oversold,” Navellier noted, pointing investors away from a pure hardware focus and toward the downstream beneficiaries of the AI boom.
Importing Deflation: The Pricing Power Surprise
In a contrarian take on the global supply chain, Navellier dismissed fears that tariffs or logistics costs would wreck margins this quarter. Instead, he argued that the U.S. is benefiting from China's economic slowdown.
“The U.S. is importing deflation from China, so tariffs are no longer causing pricing problems,” he explained.
Sectors to Shun: Housing and Logistics
The outlook is far grimmer for housing-related stocks and logistics providers. Navellier warned that high ownership costs are causing a “deferral effect” on big-ticket renovations, leaving Home Depot Inc. (NYSE:HD) and Lowe’s Companies Inc. (NYSE:LOW) in a precarious position until at least Spring 2026.
“Consumers are struggling with high property insurance and other homeownership costs, so they are postponing home improvement spending,” he said.
The Bottom Line
For investors navigating Black Friday 2025, the message is clear: avoid the broad market indices. The opportunities are concentrated in “AI appliers,” data center builders, and the two retailers—Costco and Walmart—where consumers are fleeing to stretch their dollar.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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