Billionaire Investor David Einhorn Just Bought These Beaten-Down Consumer Stocks. Are They Ready to Rally?

Billionaire investor David Einhorn was out bargain hunting in the consumer space in the first quarter, adding a quartet of beaten-down names to his portfolio.

Einhorn is known for investing in undervalued and out-of-favor stocks, so his foray into the consumer space is perhaps no surprise.

Let's look at the four consumer stocks he was buying earlier this year.

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1. Victoria's Secret

Einhorn increased his position in Victoria's Secret (NYSE: VSCO) by 30% in Q1, making it his eighth-largest position.

He talked about the stock at the recent Sohn conference, noting how new management is returning the retailer to its identity, which is starting to resonate with customers and has stabilized traffic. He noted that the company's margins are only about half of historical levels, so he sees a strong runway of growth ahead.

With the stock trading at a forward P/E of 12.5 times 2026 analyst estimates, it doesn't look like investors have fully bought into the company's turnaround. However, it's seeing solid same-store sales growth and strong international growth, so the setup does look like it is there.

2. Crocs

One of Einhorn's new positions was in Crocs (NASDAQ: CROX). The company's namesake brand has had pretty steady sales, led by international growth. However, its HeyDude brand has been a disaster ever since it acquired it in 2022, and the company is still working to clear up inventory issues.

With a forward P/E of just 7, Crocs stock is in the deep bargain bin. The big opportunity for the company is finally stabilizing HeyDude, which it looks closer to accomplishing. Direct-to-consumer sales for the brand were up 8% last quarter, and it upped the brand's full-year sales forecast to a decline of 5% to 7%, up from prior guidance of a 7% to 9% decrease.

If Crocs can turn around HeyDude, the stock should have a lot of potential upside given its low valuation.

3. Deckers Outdoor

Crocs wasn't the only footwear company that Einhorn was buying in Q1; he increased his stake in Deckers Outdoor (NYSE: DECK) by more than 60%.

The stock has struggled after surging to more than $215 in January 2025, as investors worried that the popularity of its Ugg brand would start to wane and that its Hoka brand was about to run out of steam.

The company's two main brands have continued to generate strong revenue growth, although not at the breakneck pace they had been seeing earlier. Nonetheless, this is still a company with a solid history of driving both revenue and profitability growth. With the stock trading at a forward P/E of 13 times, it looks like a potential bargain buy.

4. Peloton

One of the more interesting buys that Ackman made was Peloton Interactive (NASDAQ: PTON), increasing his holdings by more than 4,000%. At only 1.4% of his portfolio, it's still a small position, but the increase in shares is still noteworthy.

Peloton ran into huge issues coming out of the pandemic, as it mistook a surge in demand due to people being stuck at home for a new baseline of demand for its exercise bikes. This led to the company over-ordering and storing large equipment, which caused its gross margin to nosedive and even turn negative one quarter.

While Peloton has continued to struggle with revenue growth, seeing declines for the past four years, it has greatly expanded its gross margin during this period. In fact, the gross margin is now higher than it was before the pandemic. Meanwhile, the company is looking toward the commercial gym market for growth following its acquisition of Precor, with a new commercial series of products set to ship late this year. Peloton's also partnered with Spotify to allow the music streamer's premium subscribers to take on-demand workout classes.

Peloton stock is down 95% over the past five years, but the company has made some nice strides over the past few years to better position itself for the future. If it can start growing revenue again, the stock could have big upside given its improved gross margin.

Geoffrey Seiler has positions in Crocs. The Motley Fool has positions in and recommends Deckers Outdoor, Peloton Interactive, Spotify Technology, and Victoria's Secret & Co. The Motley Fool recommends Crocs. The Motley Fool has a disclosure policy.