Higher Gas and Diesel Prices Are Coming for Consumer Wallets and the Stocks That Depend on Them

The Iran war has had significant economic effects. Although broad inflation has remained elevated, the first thing consumers have noticed has likely been the spike in gas prices.

The nationwide average price of regular gasoline was $4.39 a gallon as of May 1, according to AAA. It was $4.06 a month ago. A year ago, consumers paid $3.19 a gallon.

Unfortunately, there's not much consumers can do in the short run to conserve gas. And since they're paying a much higher price at the pump, consumers have less to spend on discretionary items.

This will weigh on consumer discretionary companies' results and their stock prices. These two stocks' share prices have fallen, but do they warrant investing your hard-earned money?

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1. Chipotle Mexican Grill

To put it bluntly, Chipotle Mexican Grill (NYSE: CMG) has had a tough time lately. The fast-casual restaurant has seen sales hit a rough patch, but that doesn't seem to have been due to people specifically avoiding Chipotle.

There was a hint of good news in Chipotle's recently reported first-quarter results. Same-store sales (comps) increased 0.5%, with higher traffic contributing 0.6 percentage points, although spending subtracted 0.1 percentage points. Factoring in the tough consumer spending environment, management expects flat comps for the year.

The results and guidance represent an improvement over last year. Chipotle's 2025 comps dropped 1.7%.

However, the company's fresh and natural ingredients, along with convenience and reasonable prices, have clearly resonated with consumers throughout the years. While consumers facing tough choices between basic items and eating out may put a dent in near-term sales, there's no reason to believe they won't return to ordering at Chipotle's once the environment improves.

Management certainly feels good about the company's long-term growth prospects. It has continued opening new locations and plans 350 to 370 additional restaurants this year.

Over the last year, through May 1, Chipotle's stock has lost 34.5%. That severely underperformed the S&P 500 index's 29% gain.

However, the valuation has become much better, making Chipotle's stock more attractive. The price-to-earnings (P/E) ratio has dropped from 48 to 30 over the last year. The current P/E ratio is in line with the S&P 500's multiple of 31.

Between the better valuation and attractive long-term growth prospects, shareholders should be handsomely rewarded for their patience.

2. Home Depot

Home Depot's (NYSE: HD) challenges stem from homeowners putting off large projects. There have been a couple of reasons for this. Relatively high interest rates make borrowing for these renovations more expensive. Additionally, homeowners have been squeezed by the same economic factors hurting a lot of people's wallets.

The company's fiscal 2025 comps increased a tepid 0.3%, and they were up 0.4% in the fourth quarter (ended Feb. 1). Management expects a range of flat-to-2% comps growth this year.

While people worry about taking on major projects when they're spending more for basic items like gasoline, homeowners and professional contractors will undoubtedly return to Home Depot eventually. After all, the company has the largest sales of home improvement retailers, offering convenience and attractive prices. And people will have to undertake renovations at some point.

Meanwhile, investors have expressed their displeasure with Home Depot's recent results. The stock price has dropped 9.6% over the past year.

The price decline has caused Home Depot's stock valuation to become more compelling. The shares have a P/E ratio of 23, down from a year ago, when it was 25. Earlier this year, the stock had a P/E multiple of 27.

Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill and Home Depot. The Motley Fool recommends the following options: short June 2026 $36 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.