3 Best Stocks to Buy When Consumer Confidence Falters

Consumer confidence appears to be falling again, which can make it difficult to decide which stocks to buy. U.S. consumer confidence fell to six-month lows last month as the surge in Covid 19 cases and higher inflation dimmed the economic outlook.

That cloud of uncertainty seems to be covering the majority of consumers,” according to economist Lynn Franco of The Conference Board.

The ongoing concerns surrounding the coronavirus pandemic and inflation have seriously dented the U.S. consumer sentiment. Moreover, the falloff in sentiment is also reflective of an emotional response that the pandemic would come to a halt.

Additionally, the crippling supply chain disruptions and the broader reopening of the economy have led to a healthy increase in prices for various commodities. Soaring home prices and rental payments are also affecting many Americans’ finances.

Hence, investors are looking to consumer staple stocks which helped them navigate the crisis last year. Three of the best consumer stocks, in my view, are discussed in the article.

  • Coca-Cola (NYSE:KO)
  • Archer Daniels Midland (NYSE:ADM)
  • Target (NYSE:TGT)

Stocks to Buy: Coca-Cola (KO)

coca-cola (KO) bottles and cans. coke is a blue-chip stocks
Source: Fotazdymak / Shutterstock.com

Coca-Cola is the largest nonalcoholic beverage company in the world with unparalleled global brand recognition.

It operates the world’s top five soft drink brands and an array of other reputable intellectual properties. The company is now back to winning ways, posting 37% organic sales growth. Moreover, Coke has been focusing on its optimization efforts to reduce its less profitable brands from its portfolio.

Coca-Cola’s strong second-quarter results are indicative of its resilience in its industry. Organic sales growth and operating margin expansion were at an incredible 37% and 29.8%, respectively.

Moreover, the company generates robust cash flows from its business performance, with cash flow from operations at $5.5 billion at the end of the quarter. Year-over-year operating cash flow growth is at a remarkable 43.7%.

On top of that, KO stock has an outstanding dividend profile with a 3% forward yield and a payout ratio of over 70%.

Archer Daniels Midland (ADM)

Archer-Daniels-Midland (ADM) logo on sign at office campus
Source: Katherine Welles / Shutterstock.com

Archer-Daniels-Midland is the world’s largest agricultural processor, having roughly 800 facilities globally.

It is currently engaged in various aspects of the global food supply chain, operating in several segments. In the past year, it has looked to transform its business by streamlining its business. As a consequence, it has achieved $1.3 billion in annual cost savings.

Moreover, its efforts have resulted in an 8.9% increase in operating profits of $2.1 billion from the previous year.

The company has performed impressively in the past three quarters, posting double-digit growth in revenues. It generated a healthy $22.9 billion in its second quarter, beating estimates by $4.63 billion and a 40.8% improvement from the prior-year period.

Agricultural services and oilseeds revenues of $18.3 billion came in 20.5% higher than estimates. It expects the momentum to continue in the second half closing out the year with a bang. ADM stock has moved sluggishly of late but should pick up the pace in the coming months.

Stocks to Buy: Target (TGT)

an image of bullseye the target (TGT) dog in a target store
Source: Robert Gregory Griffeth / Shutterstock.com

Since last year, retail giant Target has been on a roll, benefiting from the increased demand for household staples and the development of its omnichannel platforms.

Moreover, TGT stock has performed spectacularly in the past 12-months generating over 66% returns for its shareholders. Despite its run-up, its price metrics suggest that it trades below its peers, as investors aren’t pricing its newfound catalysts.

Target has done well to evolve from a traditional brick-and-mortar retailer to an innovative company that operates across multiple sales channels. Despite the pandemic-led disruptions, it has exceeded revenue and earnings expectations in the past six consecutive quarters.

The company continues to invest in improving its customer experience and unique competencies. Though it’s not as dominant as Walmart (NYSE:WMT), it’s on track to achieve a similar size in the next decade.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.

Article printed from InvestorPlace Media, https://investorplace.com/2021/09/3-best-stocks-to-buy-when-consumer-confidence-falters/.

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