Although the broader markets have gotten off to a great start in 2019, several overhangs may potentially ruin the party. First and foremost is the ongoing U.S.-China trade war that seemingly has no end. Second, bitter rivalries in Washington threaten domestic stability. As such, buying consumer stocks seems counterintuitive.
However, the actual data points may suggest a different tale. Although the latest reading for consumer sentiment slipped noticeably on a month-to-month and year-over-year basis, the metric compares favorably against longer-term averages. For instance, consumer sentiment has generally moved higher since the late summer of 2011.
Undoubtedly, domestic jitters and overseas conflicts have weighed on consumer stocks. But it’s also worth noting that not all the components in this category are speculative affairs. Indeed, some of the best stocks to invest in are levered toward consumer markets.
While the discretionary subsegment typically receives most of the attention, consumer staples represent viable opportunities. No matter what the economy brings, people must do the basics: eat, drink, change their underwear, etc. As a result, consumer stocks can be incredibly shrewd acquisitions, especially at this juncture.
So without further ado, here are the consumer segment’s ten best stocks to invest in:
Consumer stocks like Clorox (NYSE:CLX) often don’t spark many headlines. As primarily cleaning-products specialists, they are hardly what you call compelling, next-generation opportunities. But when the smelly stuff hits the fan — both literally and metaphorically — CLX really comes alive.
While most other names took a nosedive in 2018, Clorox became one of the best stocks to invest in. Since falling to a bottom on April 23, 2018, shares have gained a phenomenal 37%. Adding to the overall story, CLX pays out a fairly decent 2.6% dividend yield.
Once the infighting stops in Washington and we can focus on the bigger picture, CLX may lose its charm. But until then, investors seeking shelter during this uncertainty can’t go too wrong with Clorox. The company features steadily rising revenues and strong net margins, which combine to generate reliably predictable cash flow.
Source: Carlos via Flickr (Modified)
General Mills (GIS)
If you want the best stocks to invest in during a tough market environment, anything food-related should do the trick. Obviously, humans work best when they have three (or more) meals a day. With breakfast being the most important, cereal-maker General Mills (NYSE:GIS) should be on the top of the list.
Unfortunately, that’s not how things have turned out. Last year, GIS shares nearly hemorrhaged 32%, comparing unfavorably even against volatile consumer stocks. One of the key reasons for this disappointment is the product selection. As manufacturers of sugary concoctions like Cocoa Puffs and Lucky Charms, GIS lost traction with health-conscious fans.
That said, management has learned its lesson. Moving forward, they’re increasingly focusing on healthier options. While this transition will take some time, we’re already seeing traction. In its most recent quarter, GIS rang up $4.4 billion in sales, up 5% year-over-year.
Philip Morris International (PM)
The best stocks to invest in don’t necessarily have to be the best for you. Case in point is tobacco giant Philip Morris International (NYSE:PM). Thanks to several decades of anti-smoking legislation and initiatives, we know that tobacco is dangerous. Yet PM stock still attracts significant attention.
At first, this concept doesn’t pass a basic logic test. According to the American Lung Association, smoking rates have fallen dramatically since the mid-1960s. More critically, this decline cuts across both young and older demographics. Given this backdrop, investing in PM seems like a guaranteed money pit.
However, e-cigarette usage has veritably skyrocketed. Although somewhat cynical, Philip Morris can easily advantage this dynamic. While smaller e-cigarette or vaporizer companies have captured the initial demand, PM can leverage its massive resources to reach a wider audience.
Source: Mike Mozart via Flickr
Ulta Beauty (ULTA)
When it comes to picking out consumer stocks during this shaky period, chances are that the cosmetics industry isn’t on the top of your list. However, the recent surge in Ulta Beauty (NASDAQ:ULTA) may help change your mind.
In fact, ULTA may be one of the best consumer stocks to buy because of its two-pronged attack. Primarily, the company generates revenues through its brick-and-mortar stores. Ulta represents one of the few names that hasn’t completely fallen prey to the e-commerce revolution. Second, Ulta offers its own in-house brands of beauty products.
The latter point is especially significant due to cosmetics consumers’ buying habits. Contrasting with other sectors, once a shopper finds the right product, they’re essentially customers for life. This brand loyalty will likely lift ULTA, even as other industries struggle for traction.
Avery Dennison (AVY)
If you firmly believe that consumer stocks will fly in 2019 and beyond, do yourself a big favor: take a long look at industrial firm Avery Dennison (NYSE:AVY). While other companies on this list focus on their products and services, Avery Dennison specializes in their packaging.
Without product labels and adhesives (and recently, RFID chips), the retail sector would quickly become chaotic. As a result, AVY stock enjoys indispensable demand. Just as importantly, almost every industry requires some form of labeling. Thus, no matter what happens among consumer stocks, Avery Dennison should always find clients.
Interestingly, AVY stock seemingly trades against its fundamentals. Last year, shares took a massive dive, yet sales have consistently moved higher since mid-2016. At a certain point, I believe AVY is due for a bounce back.
As any study or survey will reveal, Coca-Cola (NYSE:KO) is among the world’s most powerful and iconic brands. But for many years, the beverage-maker rarely made it into a list of best stocks to invest in. While it was predictable, KO stock was predictably boring.
However, after a series of convincing earnings beats, KO finally started gaining traction. Last year, shares gained nearly 7%. Of course, in and of itself, that doesn’t sound like much. However, funds levered toward the major indices took a beating, while KO spared its shareholders pain. In addition, the company currently pays a generous 3.3% dividend yield.
Moving forward, management’s decision to revamp its iconic soft drinks will likely continue ringing up the cash register. Furthermore, its focus on healthier beverages has finally appealed to younger customers.
If you’re thinking about adding relatively safe consumer stocks to your portfolio, you can’t do much better than Costco (NASDAQ:COST). As the pioneers of the members-only warehouse retail business model, COST represents consistent demand through every economic cycle.
In its most recent quarter, Costco pulled in $35 billion, up a little over 10% year-over-year. That contrasts sharply with other retailers like Walmart (NYSE:WMT), which experiences growth in the low single digits. But despite the strong sales trend, COST stock took a beating last month.
Still, I think the volatility provides a tempting entry point for speculators. As anyone can see from the German luxury cars and SUVs that dot any Costco parking lot, the retailer attracts affluent shoppers. That, along with its ultra-popular Kirkland private label, should help move the needle for COST stock.
Lowe’s Companies (LOW)
While many consumer stocks today offer long-term viability, some investments are simply doomed. The most obvious example we have is Sears (OTCMKTS:SHLDQ). Thanks to an acidic leader and even more acidic decision-making, Sears fell from an iconic firm to bankruptcy.
But in business, one company’s pain is another company’s opportunity. Although a cynical mentality, the Sears meltdown strongly benefits Lowe’s Companies (NYSE:LOW). First, Lowe’s will soak up some of the demand that the centuries-old retailer left in its wake. Second, product makers that once did extensive business with Sears have now shifted to Lowe’s.
Most importantly, LOW stock has natural shelters against potential retail volatility. As a home-improvement specialist, shoppers don’t have too many alternative options. After all, a leaky faucet isn’t going to fix itself because the economy is underperforming.
Brown-Forman (BF.A, BF.B)
I always take studies about millennials with a grain of salt. Nevertheless, recent reports about young Americans drinking habits caught my attention: they’re increasingly ditching beer and even wine for spirits. If these assessments are accurate, you may want to consider Brown-Forman (NYSE:BF.A, NYSE:BF.B).
While Brown-Forman may not be a household name, its flagship product, Jack Daniel’s, certainly is. The beauty of having a popular whiskey brand is two-fold. First, Brown-Forman can grow with their target millennial audience. Second, young drinkers prefer high-quality spirits due to their effortless ability to mix well with other beverages.
Perhaps the most compelling reason to buy either BF.A or BF.B is their discounted price. Since early summer of last year, shares have fallen by double digits. However, the bears are likely overstating their hand considering the company’s underlying tailwinds.
Isodiol International (ISOLF)
If you really want to swing for the fences, you can try your hand at Isodiol International (OTCMKTS:ISOLF). As an over-the-counter investment, ISOLF probably isn’t going to make many other lists of best stocks to buy. And after losing 91% last year, most have given up on the cannabis firm.
Technically, though, ISOLF stock is up 45% year-to-date. Of course, this is largely due to the law of small numbers. Nevertheless, the volatility has seemingly died down. But is this a genuine opportunity to buy Isodiol, or, instead, a bull trap waiting to snag its next victim?
So long as you understand the extreme risks, ISOLF presents an interesting case. Out of all the subsegments within the cannabis sphere, cannabidiol (CBD) arguably offers the most potential. Since CBD doesn’t contain any psychoactive components, it has the potential to breakthrough both nationally and internationally.
Isodiol features a wide variety of CBD products, which could eventually skyrocket ISOLF. However, competition can also plummet shares.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.
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