The narrative of the stock market has been simple recently. Yields are rising. Stocks are dropping. And, as is true with every sell-off, everyone is bracing for the worst.

But, this doesn’t feel like the “big one” to me. Eventually, this bull market will hit some obstacle that will stop it dead in its track. At that time, the bull market will die, and stocks will fall off a cliff.

This recent selloff isn’t that. Instead, it just a valuation reset to adjust to higher rates. This reset won’t be that big. Stocks will bounce back. And, the bull market will remain in-tact. My conviction in this thesis comes from four major points:

• Stock valuations aren’t extended and can support high bond yields. The forward earnings yield on the S&P 500 is over 6%, while the 10-Year Treasury yield is at 3.2%, implying an equity risk premium of roughly 300 basis points. Normally, valuations don’t get pressured until this gap closes to 200 basis points or lower.
• GDP growth is below trend, and every recession since 1970 has been preceded by above-trend GDP growth. GDP has followed a nice trend since World War II. When GDP is above that trend, the U.S. economy is prone to a recession. Importantly, there have been 7 recessions since 1970, and all 7 have been preceded by above-trend GDP. We are below trend right now, and by a considerable amount, meaning that this expansion era still has more firepower before the bust.
• Debt levels remain reasonable and in-line with long-term averages. There is a chart floating around showing that corporate debt as a percent of GDP has ballooned to record highs, something its only done before recessions. But, net corporate debt (debt less liquid assets) as a percent of GDP is well off record highs, and simply in-line with its long-term average. Net debt is a far better indicator of delinquencies, and thus, debt is not a problem right now.
• Inflation remains checked and below problematic levels. Historically speaking, recessions happen when the economy is red hot and inflation is large and problematic. That is not the case today. The inflation rate is just above 2%. Leading into prior recessions, inflation was always north of 3% and usually much larger.

As such, I think stocks will bounce back. During that bounce back, personal product stocks should out-perform because of their broad exposure to what is still a red-hot consumer sector. So long as the consumer remains strong, any selloff in personal product stocks should be bought.

Which personal product stocks should you buy? Let’s take a closer look at my three favorite personal product stocks.

Personal Product Stocks to Scoop Up: Nutrisystem (NTRI)

Source: Nutrisystem

One of my favorite personal product stocks at the current moment is Nutrisystem (NASDAQ:NTRI).

Nutrisystem is a leading provider of health and wellness products and services. This is a great space to be in right now. Secular trends are moving in favor of mass consumer adoption of these services.

As such, Nutrisystem’s demand should benefit over the next several years due to secular tailwinds.

Nutrisystem’s numbers used to support this. Revenue growth was trending around 20-30% prior to 2018. But, management misfired at the start of the 2018 diet season. As such, 2018 got started on the wrong track, and the balance of the year has been spent trying to get back on the right track.

The company is getting back on the right track. Revenues and margins are largely stable year-over-year. Next year, this company should be able to get back to growth, and turn secular demand tailwinds in 10%-plus revenue growth.

Meanwhile, this stock only trades at 17x forward earnings and has a 2.5% dividend yield. Thus, you have a low multiple, big dividend stock with a strong and improving growth narrative in a business with secular demand tailwinds. That is a combination for stability and success.

Personal Product Stocks to Scoop Up: Unilever (UL)

While the market might be freaking out, the consumer is not. Consumer confidence, sentiment and spending are all at multi-year highs just a few weeks before the start of the holiday shopping season. Thus, the 2018 holiday season projects to be a big one for consumers.

In this scenario, Unilever (NYSE:UL) wins. Unilever is a multinational consumer goods company with its fingers everywhere. They own brands such as Axe, Dove, Lipton, Magnum and Breyers. Because of its broad exposure to the consumer, as goes the consumer, so goes UL stock.

The consumer is very strong right now, and given that economic conditions project to remain favorable, the consumer should remain strong for the foreseeable future. Thus, UL stock should perform reasonably well against this backdrop.

It also helps that after this recent sell-off, UL stock is in deep value territory. The stock is just above 52-week lows, while the earnings multiple is at 52-week lows and the dividend yield is at 52-week highs. In fact, the dividend yield is as high as it has been since late 2016. At that point, UL stock was around $40. By mid-2017, it was around $55. We could get a similar run this time if the consumer remains strong for the next several months.

Overall, UL is a strong personal products stock that has dropped to levels that imply a near-term bottom. As such, this could be a strong stock to add to your portfolio to mitigate risk.

Personal Product Stocks to Scoop Up: Weight Watchers (WTW)

Back to the health and wellness space, another personal products stock that should be a big winner over the next several years due to secular demand tailwinds is Weight Watchers (NYSE:WTW).

At its core, WTW stock is a reasonably valued name in a secular growth market. Consumers are now more concerned with what they eat than ever before. They are also more willing to try weight-loss programs than ever before, as celebrity endorsement of weight-loss regimes has transformed the private feelings of weight-loss into public, hopeful feelings. This especially true at Weight Watchers, where celebrities like Oprah and DJ Khaled have publicly endorsed the company’s programs.

This combination of greater consumer awareness and willingness implies accelerated adoption of programs like the ones offered by WTW.

Indeed, this what we have seen over the past several quarters. Last year, revenues grew by 12%, while subscribers grew by 23%. So far this year, revenue growth has run around 20%, while subscriber growth has run around 30%.

WTW stock, once one of the market’s high flyers, has taken a breather recently due to an overextended valuation. But, the fundamentals and numbers remain strong, and at current levels, the stock looks like a bargain. This is a company with secular demand tailwinds currently growing revenues at a 20% rate and projected to keep growing revenues at a double-digit rate for the foreseeable future. Those are big growth numbers.

Yet, WTW stock trades at just 21x forward earnings, which is a rather normal multiple in this market. For example, Coca-Cola (NYSE:KO) also trades at 21x forward earnings.

As such, WTW is a reasonably valued stock in a secular growth market. That makes this stock worth considering on this dip.

As of this writing, Luke Lango was long NTRI and WTW.