NEW YORK (The Street) -- Mid-level luxury brands are feeling the pain of a tentative consumer market. With the strong dollar deterring international shoppers, aspirational brands like Ralph Lauren (RL), Michael Kors (KORS) and Coach (COH) are struggling to attract shoppers.

So are the mid-level luxury brands in crisis or have they just hit a temporary speed bump?

Mid-level luxury will bounce back, according to Cowen and Company's Senior Retail Analyst Oliver Chen. Handbag profits have suffered from end-of-season promotional sell-offs, but Chen remains bullish on mid-level brands like Kate Spade (KATE) and Tiffany's (TIF), which he said have plenty of growth potential.

But tellingly, for long-term investments Chen suggested investors look to the cost-cutting budget brands like Costco (COST), and TJX (TJX).

Target (TGT), said Chen, is a retail winner, driven by strong execution in signature categories and impressive digital growth, despite its online hacking scandal last year.

For investors looking to give their portfolio a makeover, Chen suggested the beauty sector as one to watch, with a "nice growth rate of 8%-10%."

Ulta Cosmetics (ULTA) and Sally Beauty (SBH) were firm favorites, both of which have strong loyalty programs and customer relationship management, according to Chen.

Apparel, on the other hand, is a sector where investors should proceed with caution, the analyst noted. While it's still growing at 3%, Chen pointed out that the group is heavily discounted in a tough climate.

A more worrying trend for investors could perhaps be that the mid-level luxury brands' key customers are becoming increasingly frugal, according to some analysts.

Marketing specialist Pam Danziger identified a group she calls "HENRYS" (High Earners Not Yet Rich) as cutting back on their retail habits to invest more in rent, cell phones and time-saving services.  According to Danziger, these shoppers are aged between 25 and 35 and make up around 18% of households. 

More from Investing

Finding Stocks Right for You: Cramer's 'Mad Money' Recap (Friday 8/25/18)

Finding Stocks Right for You: Cramer's 'Mad Money' Recap (Friday 8/25/18)

Bitcoin Today: Prices Continue to Slump Heading Into Weekend

Bitcoin Today: Prices Continue to Slump Heading Into Weekend

Week Ahead: Wall Street Looks to Jobs Report as North Korea Meeting Less Certain

Week Ahead: Wall Street Looks to Jobs Report as North Korea Meeting Less Certain

Replay: Jim Cramer on the Markets, 10-Year Yield, Oil Prices and Foot Locker

Replay: Jim Cramer on the Markets, 10-Year Yield, Oil Prices and Foot Locker

3 Must Reads on the Market From TheStreet's Top Columnists

3 Must Reads on the Market From TheStreet's Top Columnists