Three Stocks to Hold After December CPI: Mixed Signals from Inflation Data

December’s consumer price data revealed a complex inflation landscape that presents both opportunities and caution for investors. While core inflation—which strips away volatile food and energy components—showed its slowest monthly pace since March 2021 at 0.2%, overall CPI advanced 0.3% monthly and 2.7% annually. Food prices emerged as a particular headwind, climbing 3.1% year-over-year with meat, poultry, and fish up nearly 7%. These divergent trends are reshaping investment thesis for specific sectors, presenting opportunities in online automotive marketplaces while challenging food producers managing input cost pressures.

Why Cars.com and Carvana Hold Appeal: Used Vehicle Price Deflation

Among the most notable CPI movements, used car and truck prices registered the steepest decline of any category outside food and energy, dropping 1.7% on an unadjusted monthly basis. Despite remaining 1.6% higher than a year ago, this significant pullback suggests renewed buyer activity entering the market—a dynamic that should benefit Cars.com and Carvana, the nation’s leading online platforms for pre-owned vehicles.

Cars.com: Compelling Valuation with Upside Potential

Cars.com trades at approximately $12 per share with a forward earnings multiple of just 5X, presenting an attractive entry point for value-oriented investors who can hold through near-term uncertainty. Leadership transitions and insider selling have weighed on sentiment; however, the company’s projected 33% EPS growth trajectory for fiscal 2026 (reaching $2.35) offers meaningful upside if execution improves. Currently holding a Zacks Rank of #3, Cars.com carries execution risk given a history of missing quarterly targets, but the risk-reward profile remains compelling for patient investors willing to hold through potential volatility. The company is scheduled to report Q4 2025 results on February 26th.

Carvana: Premium Valuation Justified by Growth

Carvana presents a contrasting opportunity—one where investors must hold premium valuations to capture extraordinary growth. The self-described “fastest-growing used car retailer” has demonstrated remarkable momentum, gaining over 6,000% in the past three years. Trading near $450 per share at 64X forward earnings, Carvana appears expensive on traditional metrics; however, its growth trajectory justifies scrutiny from growth-focused investors. FY25 EPS is projected at $5.49, representing a 245% increase from 2024’s $1.59. With FY26 earnings expected to reach $7.31 (another 33% jump), Carvana’s PEG ratio near 1.0 suggests the stock may offer fair value when considering long-term growth rates. Carvana holds a Zacks Rank of #3 following a 30% rally over the past three months and reports Q4 2025 results on February 18th.

Tyson Foods: Hold Reflects Current Headwinds in Beef Segment

The CPI data underscores structural challenges facing meat processors, particularly as beef and veal costs surged 16% year-over-year. Ground beef prices are approaching $7 per pound, driven by cattle supply constraints that have elevated Tyson Foods’ input costs dramatically. The critical issue: when livestock supplies tighten, meat producers absorb higher acquisition costs that cannot be fully passed to consumers, pressuring near-term profitability.

Tyson Foods currently carries a Zacks Rank of #4 (Sell), reflecting analyst concerns that EPS estimates could face downward pressure. Recent quarters have already witnessed modest estimate reductions for both FY26 and FY27, signaling that relief from cattle shortages may take longer than previously anticipated. While the long-term opportunity emerges once supply normalizes and margins recover, current conditions warrant a hold stance as input cost headwinds persist.

Investment Framework: Holding Through CPI Transitions

These three stocks illustrate how CPI data creates divergent investment outcomes. Used vehicle price deflation supports a constructive hold on automotive marketplace players, while elevated food inflation pressures meat producers with limited pricing power. Investors evaluating holdings should monitor February earnings reports closely, as management commentary will clarify whether the assumed tailwinds and headwinds from December’s CPI data are materializing as expected.