December’s Consumer Price Index (CPI) report shows that inflation is steady, but it isn’t meeting market expectations or the Federal Reserve’s goals. Core consumer prices, which exclude food and energy, went up by 0.2% from the previous month and 2.6% over the past year. This is the slowest growth since March 2021. When considering all categories, the CPI increased by 0.3% monthly and 2.7% yearly. Food prices stood out, jumping 0.7% from the last month and 3.1% from the previous year. Used car prices fell by 1.7% monthly (not adjusted) and 1.1% (seasonally adjusted), which might benefit Cars.com and Carvana, two major online used car retailers.

Stock Analysis of Cars.com

Cars.com’s stock is currently $12 per share, with a forward earnings multiple of 5X. It holds a Zacks Rank #3 (Hold). Analysts predict a 33% increase in earnings per share (EPS) by fiscal 2026, reaching $2.35, but the company has often missed earnings expectations in the past. Carvana’s stock has soared by 6,000% over the past three years, reaching a price of $450 per share with a 64X forward earnings multiple. It’s expected to see a 245% rise in FY25 EPS to $5.49, followed by another 33% increase in 2026. Meat and poultry prices have risen nearly 7% over the past year, with beef and veal prices increasing by 16% annually. Tyson Foods is struggling with cattle shortages and rising costs, which it can’t fully pass on to consumers. Tyson has a Zacks Rank #4 (Sell), and EPS forecasts for FY26 and FY27 have been downgraded. The December 2025 inflation report paints a mixed but useful picture. While inflation remains high, the slowdown in core prices suggests the Federal Reserve may choose to keep rates steady. Notably, the drop in used car prices is a significant development. The Manheim Used Vehicle Value Index indicates another small decline in the first two weeks of January 2026.

Strategic Positioning for Carvana

As Carvana’s earnings report is set for February 18th, we should prepare for a potential positive surprise. Given the stock’s high price of over $450 and significant implied volatility, considering bull call spreads is an affordable strategy. The high short interest, still over 15% of the float, could enhance any upward movement if good news emerges. Cars.com presents a different perspective on the same trend, leaning more toward a value play. Although the company has a history of missing earnings targets, its low share price makes call options relatively inexpensive. With earnings due on February 26th, purchasing March calls could be a smart move for a potential rebound, especially since recent filings show modest insider buying in early January, which counteracts some negative sentiment from 2025. In contrast, the CPI data highlights ongoing challenges for Tyson Foods. The report shows a nearly 7% year-over-year rise in meat prices, reflecting TSN’s margin squeeze due to significant cattle shortages. This is a long-term issue stemming from drought conditions that reduced cattle herds in 2023 and 2024. Recent USDA cattle reports from late 2025 confirmed that placements into feedlots are still at their lowest in a decade, meaning the supply problem persists. Furthermore, Tyson recently closed a smaller processing facility temporarily due to cattle supply issues. This indicates that challenges are continuing into the current quarter, making it sensible to consider buying puts on TSN. Create your live VT Markets account and start trading now.

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