Consumer stocks to buy now aren’t just a fleeting trend. Delving into the second quarter (Q2) reveals a landscape where consumer stocks emerge as stalwarts, offering a blend of steady portfolio growth and enticing shareholder rewards.
Amidst the resilience of the U.S. economy in recent quarters, with growth surpassing analyst expectations, the consumer spending environment remains robust. This backdrop not only leads to increased profitability but fosters a sense of stability in the economic sphere. Despite looming inflationary pressures, the enduring strength of the U.S. economy highlights why consumer stocks are a beacon for those navigating market uncertainties. Here are three consumer stocks commanding attention in this dynamic environment.
E.l.f. Beauty (ELF): Pioneering in Cosmetics
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E.l.f. Beauty (NYSE:ELF) exemplifies innovation in the cosmetics realm, thriving on its fusion of clean, vegan products at affordable prices. Capturing the preferences of Gen Z, the brand has carved a niche online and across social platforms. This innovative stance propels it as a leading growth stock, with a staggering 475% stock gain over the past three years.
In line with its financial trajectory, E.l.f. Beauty accelerated during the pandemic, achieving double-digit sales growth and sustaining this momentum. Noteworthy is its track record of surpassing analyst predictions for both revenue and earnings. The third quarter showcased an impressive 85% YoY surge in net sales to $270.9 million, outstripping estimates. Forecasts point to continued growth, with projected net sales for the year hovering between $980 million and $990 million, reflecting a remarkable 69% to 71% hike compared to the prior year. Analysts at TipRanks suggest a ‘moderate buy’ rating on ELF stock, anticipating a healthy 28% upside from current levels.
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Alibaba (NYSE:BABA) stands as a Chinese e-commerce powerhouse with a history of resilience amidst economic challenges. While current market conditions pose hurdles, the company’s agility and long-term growth drivers render it an appealing opportunity. Additionally, BABA stock trades at just 1.30 times forward TTM sales, offering a discount of 69% compared to the sector median.
Bolstered by a significant cash reserve exceeding $91.6 billion, Alibaba is well-positioned to navigate economic headwinds. This financial strength enables strategic moves and risky ventures without external funding pressures. The company’s focus on refining core operations through platforms like Taobao and Tmall, coupled with forays into digital commerce and logistics, underscores its commitment to growth. Notable is its recent quarterly performance, with the Digital Commerce group and the Cainiao logistics arm delivering 44% and 27% YoY growth, respectively. This expansion into evolving markets reflects Alibaba’s strategic positioning across regions witnessing rapid e-commerce uptake.
Ingredion (INGR): Sustaining Growth Amidst Challenges
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Ingredion (NYSE:INGR) specializes in versatile ingredient solutions spanning industries from food to textiles. Its operational consistency over the years has mirrored in a stock gain surpassing 21% in the last three years. Noteworthy is INGR’s distinguished dividend profile, yielding a substantial 2.83% while boasting 13 consecutive years of dividend growth, outpacing the sector’s median performance.
Despite recent lackluster top-line growth due to prevailing headwinds, Ingredion continues to maintain a robust profitability profile. For instance, its free cash flow margin of 6.40% outperforms the sector median by 30%, complemented by an impressive return on common equity standing at 20%. Considering its presence in burgeoning market segments, Ingredion is poised to rebound in a more favorable business climate.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The views expressed in this article solely represent those of the author, adhering to the InvestorPlace.com Publishing Guidelines.
Muslim Farooque, a devoted investor and eternal optimist, brings a wealth of experience in gaming and tech enthusiasm to his analytical focus on technology stocks. Armed with a Bachelor of Science degree in Applied Accounting from Oxford Brookes University, his insights resonate with a broad audience seeking informed investment decisions.
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The original article on 3 Consumer Stocks to Buy Now: Q2 Edition was first appeared on InvestorPlace.