Hey there, bargain hunter.

The U.S. consumer just gave us a live-fire test. Memorial Day weekend delivered foot traffic numbers, airline headcounts, and fuel demand figures that don’t all point in the same direction. That’s the interesting part. Most people will read the headline and move on. We’re going to sit with the contradictions for a minute, because that’s where the real opportunity lives.

What Actually Happened

Start with air travel, because the numbers are hard to argue with.

TSA screened over 13.6 million passengers from Thursday through Monday of Memorial Day weekend 2025, making it the busiest Memorial Day weekend in U.S. history. That beat the 13.4 million screened over the same stretch in 2024. The peak day was Friday, when more than 3 million passengers moved through checkpoints. That was only the third time in TSA history that daily screenings topped 3 million.

One factor driving that surge: airfares fell roughly 9% year-over-year according to the Consumer Price Index. Cheaper tickets pulled more bodies onto planes. Simple as that.

Retail foot traffic is where things get more nuanced. Overall brick-and-mortar visits were essentially flat year-over-year according to Placer.ai data. But that flat reading came after several weeks of above-average traffic, likely consumers front-loading purchases ahead of tariff uncertainty. The fact that shoppers still showed up during Memorial Day week, even after that pull-forward, is a mild positive.

Mall formats actually outperformed. Indoor malls posted a year-over-year visit increase of 6.7%, open-air centers gained 5.0%, and outlet malls were up 3.9%. Longer visit durations suggest consumers aren’t just walking in and walking out. They’re spending time. Movie theaters drove a meaningful chunk of the entertainment boost, which is worth noting separately.

Worth a brief aside here: the demographic profile of mall visitors shifted. Median household income among visitors declined slightly versus last year. That means recent mall gains aren’t being propped up solely by the wealthiest cohort. It’s a broader base, at least for now.

On gasoline, the picture flipped entirely. National average pump prices heading into Memorial Day 2025 were $3.17 per gallon, down 11% (about 41 cents) from a year earlier, and the lowest Memorial Day gas prices since 2021 in inflation-adjusted terms. The EIA noted that substantially lower crude oil prices kept pump prices well below their seasonal norms. AAA projected 39.4 million Americans would travel by car, a 3% increase versus 2024.

And gasoline demand responded. EIA data showed U.S. gasoline demand hit 9.542 million barrels per day in the week leading into the holiday, the highest weekly estimate of 2025 up to that point. Memorial Day demand was consistent with the historical pattern: it tends to mark the annual volume peak at the pump.

The Real Story Underneath

Here’s what the data is actually telling us: the U.S. consumer is bifurcating at an accelerating pace, and that has real consequences for which stocks you want to own.

On the high end, air travel is setting records. On the lower end, planned per-person holiday spending dropped sharply. A RetailMeNot survey found average Memorial Day weekend spend intentions fell from $289 in the prior year to $86, even as the share of consumers planning to shop at all rose from 36% to 54%. More people showing up, spending less per trip. That’s a volume story, not a pricing story. And that distinction matters enormously when you’re trying to figure out which businesses actually benefit.

The credit stress data is real and shouldn’t be buried in a footnote. Serious credit card delinquencies are approaching levels not seen since the Great Recession. The savings rate hit its lowest point since October 2022. Roughly 3.6 million households are in default on student loans. Wealthy households are effectively subsidizing the headline consumer spending numbers. Lower-income consumers are pulling back hard.

What you get, then, is a consumer economy that looks fine in aggregate but is quietly hollowing out at the base. Travel volumes hold up because higher-income households are carrying that number. Retail foot traffic holds up because promotional events still bring people through doors. But the ticket size is shrinking and margin pressure on retailers is real.

Two Cheap Stocks That Fit This Environment

Given what the holiday weekend data shows, travel holding up, experiential spending winning, value-driven retail showing resilience, and higher-income consumers still opening their wallets, here are two stocks trading at historically compressed valuations that map directly onto those themes.

Pick No. 1: Nike (NKE)

The Swoosh is sitting at a decade-low valuation. That matters.

Nike designs, manufactures, and sells athletic footwear, apparel, and equipment globally through wholesale partners, company-owned retail, and e-commerce platforms across more than 40 countries. Its brands include Nike, Jordan, NikeSkims, and Converse.

The stock has shed roughly 73% of its peak market cap since November 2021, when it closed at an all-time high of $165.10. It trades near $44.67 as of this writing. Fiscal year 2025 revenues came in at $46.3 billion, down 10% year-over-year. Net income fell 44% to $3.22 billion. The company intentionally pulled unhealthy classic footwear inventory off the market, absorbing a deliberate revenue headwind as part of its reset.

What’s actually changing: in Q3 FY2026, wholesale revenues grew 5% year-over-year. In Q2 FY2026 they grew 8%. North America posted positive growth across all channels simultaneously in the Q3 FY2026 quarter for the first time in two years, per CEO Elliott Hill. Nike Running was up over 20% in that quarter. The return to Amazon and expanded shelf space at key wholesale partners are generating near-term revenue traction.

The Memorial Day connection is direct. Sportswear and athleisure were among the strongest-performing foot traffic subcategories during the holiday weekend. Consumers came out specifically for summer apparel and athletic goods. Nike is the default destination for that purchase.

• Revenue (FY2025): $46.3 billion (down 10% YoY, intentional reset)
• Q2 FY2026 Revenue: $12.4 billion, flat currency-neutral; Wholesale up 8%
• Q3 FY2026 Revenue: $11.3 billion, flat reported; Wholesale up 5%; North America up 3%
• Q3 FY2026 Gross Margin: 40.2% (includes 300 bps tariff impact in North America)
• Diluted EPS Q3 FY2026: $0.35
• Current stock price: ~$44.67 (down 73% from 2021 all-time high of $165.10)
• Dividend yield: ~3.63% at current price; quarterly dividend of $0.41/share
• 52-week high: $80.17
• Key risk: Tariff headwinds on Vietnam, Indonesia, and China supply chain; China softness

Bull case: Wholesale recovery accelerates through the back half of 2026. The 2026 FIFA World Cup marketing push, for which Nike is a major sponsor, drives global brand heat. Margins recover toward historical norms of 44-45% as the inventory cleanup completes and tariff pass-through improves. The stock was trading above $80 less than a year ago. At $44, the market is pricing in prolonged failure.

Bear case: The turnaround takes longer than expected. Tariff headwinds absorbed 300 basis points of gross margin in Q3 FY2026 alone. Competition from Hoka, On Running, and New Balance continues to intensify. China sales declines persist. The P/E stays compressed for years if earnings don’t recover meaningfully.

The Cheap Investor take: This is a classic fallen giant with a real catalyst on the horizon. The valuation compression is historically severe. You’re not being asked to believe in a miracle. You’re being asked to believe that the world’s most recognized athletic brand, now trading at $44 with a 3.6% dividend yield, finds its footing when the World Cup starts.

Pick No. 2: Carnival Corporation (CCL)

The biggest cruise company on earth. Trading at 12x earnings. With a $2.5 billion buyback just announced.

Carnival operates nearly 100 ships across nine global brands including Carnival Cruise Line, Princess Cruises, Holland America, Cunard, and Seabourn. It attracted nearly 14 million guests in 2025. This is not a niche player. It is the largest cruise company in the world by capacity and revenue, and it is sitting at a valuation that doesn’t reflect what the business is actually producing right now.

Here’s where it gets interesting. Carnival has beaten its own guidance in every quarter going back to 2024. Q1 FY2026 (reported March 27, 2026) delivered record revenues of $6.2 billion, record adjusted EBITDA of $1.3 billion, and adjusted EPS of $0.20, up 50% year-over-year. Bookings for 2026 were up double digits with nearly 85% of the year already sold. Customer deposits were near $8 billion. Those are not the numbers of a distressed business.

The company has also introduced a new long-term plan called PROPEL, which targets greater than 16% ROIC and greater than 50% adjusted EPS growth from 2025 levels by 2029. They announced an initial $2.5 billion share buyback program. And they raised full-year 2026 adjusted EBITDA guidance to approximately $7 billion.

• FY2025 Revenue: $26.62 billion (up 6.4% YoY)
• FY2025 Earnings: $2.76 billion (up 44% YoY)
• Q1 FY2026 Revenue: $6.2 billion (record)
• Q1 FY2026 Adjusted EBITDA: $1.3 billion (record)
• Q1 FY2026 Adjusted EPS: $0.20 (up 50% YoY)
• 2026 Full-Year Adjusted EBITDA Guidance: ~$7 billion
• 2026 Booked: Nearly 85% at historically high prices
• Customer deposits: ~$8 billion
• Trailing P/E: ~12.3x vs. peer average of ~23.4x
• Forward P/E: ~12.75x vs. hospitality industry average of ~20.8x
• Analyst avg. price target: ~$34.06 (approximately 31% above current price)
• Share buyback: $2.5 billion approved
• Key risk: $26.6 billion in debt; high leverage relative to peers; macro sensitivity

The Memorial Day connection here is even more direct than Nike. Record air travel volumes, with record TSA screenings and planes packed to historic levels, translate almost directly into vacation spending intent. The consumer who gets on a plane to celebrate Memorial Day is the same consumer who books a cruise. Carnival’s bookings data already confirms this: demand is holding at historically high prices with nearly the full year already sold.

The leverage is real and worth acknowledging. The company carries roughly $26.6 billion in total debt. The Altman Z-Score of 1.28 suggests the balance sheet warrants monitoring. But free cash flow generation is strong, debt maturities are manageable at roughly $1.4 billion for all of 2026, and the company has been actively refinancing at lower rates. They refinanced $5.5 billion of debt in Q1 FY2025 alone, locking in $145 million in annualized interest savings.

Bull case: Demand holds at elevated price levels through 2026 and into 2027, where booking volumes are already at record levels per the Q3 FY2025 earnings release. The $7 billion EBITDA target gets hit or exceeded. Debt continues to fall. The stock re-rates toward the hospitality peer average P/E of 20x and the analyst consensus target of $34.

Bear case: A recession hits consumer discretionary spend hard. Cruise bookings cancel faster than they build. Fuel costs spike and compress already thin margins. The debt load becomes a problem in a higher-rate environment. The stock’s beta of 2.33 means it falls harder than the market when sentiment shifts.

The Cheap Investor take: At 12x trailing earnings with 85% of the year booked at record prices and a freshly announced $2.5 billion buyback, the valuation does not match the operating momentum. Twenty-five analysts cover this stock. The consensus is Buy, with a $34 target. The market is pricing in a slowdown that the booking data is not confirming.

The Cheap Investor Scorecard

• NKE: Wholesale revenue trend — Watch for continued sequential growth across Q4 FY2026 and beyond. Two quarters of 5-8% gains need to become four.
• NKE: Gross margin recovery — The 40.2% Q3 FY2026 margin needs to move back toward 43-44% as inventory clears and tariff pressure eases.
• NKE: World Cup activation — Marketing spend ramps into calendar H2 2026. Watch for brand heat metrics and sell-through data at wholesale partners.
• NKE: China trajectory — Sales declines in Greater China persist. Any stabilization is a meaningful positive catalyst.
• CCL: Booking volume for 2027 — Already at record levels per Q3 FY2025. Watch for continued momentum through summer 2026 earnings releases.
• CCL: Net yields — Full-year 2025 net yields grew approximately 5.3% in constant currency. Continued yield growth is the margin expansion story.
• CCL: Debt reduction pace — Target of 2.75x net debt/EBITDA under the PROPEL plan. Watch quarterly debt balance versus EBITDA generation.
• CCL: EBITDA vs. guidance — The company has beaten guidance in every recent quarter. A miss would be the first real warning sign in two years.
• Consumer bifurcation indicator — If higher-income consumers pull back (watch AmEx and JPMorgan premium card spend data), both stocks feel it. That’s the macro risk variable worth tracking most closely.

Bottom Line

The holiday weekend data confirmed what most careful observers already suspected. The U.S. consumer is not broken. But the consumer is not uniform either. Air travel is booming. Per-trip retail spend is shrinking. Gas demand is healthy because prices are low, not because people are flush.

If higher-income consumers keep spending on experiences, both NKE and CCL have room to run from historically cheap valuations. If the bifurcation accelerates downward and even the upper cohort pulls back, both stocks will feel it, and CCL’s leverage makes it more vulnerable in that scenario.

What’s interesting is that the booking data at Carnival and the wholesale recovery at Nike are telling a different story than the macro fear. At some point, the stock prices have to catch up to the business results. Or the business results have to catch up to the fear. One of those is already happening.

Worth a closer look at both.

The Cheap Investor Editorial Team