Now is a tricky time to buy and hold consumer stocks. The results coming out of this year’s second quarter were decidedly mixed. While some consumer companies, such as Walmart (NYSE:WMT), had strong showings that pushed their share prices to all-time highs, others such as Dick’s Sporting Goods (NYSE:DKS) laid an egg, sending their stocks sharply lower.
Executives spent a lot of time talking about the impact of inflation, declining spending on big ticket items, and in-store theft or shrink as it is known in the retail sector. The overall picture painted was a gloomy one, with many retailers revising down their forecasts for the remainder of the year. However, amid the negativity, a few companies specializing in consumer goods managed to standout with strong financial results and upbeat forward guidance.
Here are the three best consumer stocks to buy now: September 2023.
ON Holding AG (ONON)
ON Holdings (NYSE:ONON) makes running shoes that are very popular with consumers right now. The Swiss-based company is using global celebrities, such as tennis star Roger Federer and supermodel Gisele Bündchen, to market its sneakers and brand them as cool and trendy. Judging by the stock’s performance, ON Holdings is succeeding. Year-to-date, ONON stock is up 80%. The company’s shares have only been publicly traded since September 2021.
Despite the big run in ONON stock, there’s currently an opportunity for investors to buy into the stock after it pulled back following the company’s recent financial results. The company’s share price dropped 14% on August 15 after ON Holdings’ second-quarter print raised concerns about inventory levels. The stock looks to have bottomed on August 28 and has been trending higher since then, making now an ideal time for investors to take a position.
Notably, On Holdings reported that its Q2 sales rose 52% from the previous year and its profit margins grew to 59.5% from 55.1%. While inventory levels ticked up from a year earlier, the company is confident they can unwind them in coming months. The median price target on ONON stock among 14 analysts who cover the company is 16% higher than current levels, making this a consumer stock to buy.
Celsius Holdings (CELH)
For a more speculative but truly high-flying stock, there is beverage maker Celsius Holdings (NASDAQ:CELH). The company that makes sugar-free energy drinks that help people accelerate their metabolism and burn body fat has become a huge hit with consumers. As a result, CELH stock has gained an incredible 4,450% in the last five years. This year, the share price has risen more than 100%, including a 40% climb over the last month while the broader market slumped.
Celsius Holdings’ business has gotten a boost from its partnership with beverage giant PepsiCo (NASDAQ:PEP). The companies forged a partnership last year, which got Celsius’ drinks onto Pepsi’s global distribution network, which has supercharged sales and helped the energy drinks enter new markets.
PepsiCo made a $550 million investment into Celsius in exchanged for preferred stock that equates to an 8.5% ownership stake. The energy drink maker just reported that its Q2 revenue rose 104% from a year earlier to $325.9 million.
TJX Companies (TJX)
Discount retailers are holding up well right now, and top among them is TJX Companies (NYSE:TJX). The company behind T.J. Maxx, Marshalls and HomeGoods continues to attract consumers who are looking for bargains amid the current high inflation environment. This enabled TJX Companies to beat Wall Street forecasts for its Q2 financial results, sending its share price up to a 52-week high. TJX stock has increased 44% over the last 12 months, outpacing nearly all other retailers.
TJX posted Q2 earnings per share (EPS) of 85 cents versus 77 cents that had been expected among analysts. Revenue of $12.76 billion beat consensus forecasts of $12.45 billion. The company raised its full-year guidance after posting a 7.7% year-over-year sales increase and 23% growth in its profits.
Company executives also made little mention of in-store theft during their Q2 earnings call. Analysts see more growth ahead, with the median price target on TJX stock nearly 10% higher than where the shares are currently trading.
On the date of publication, Joel Baglole 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.
