3 Consumer Stocks to Buy Now: Q2 Edition


  • Wager on these leading consumer stocks to buy now for reliable growth and security in your investment portfolio amid ongoing market uncertainties.
  • E.l.f. Beauty (ELF): ELF’s growth engine continues to impress with over an 80% YOY increase in net sales, outpacing expectations in Q4.
  • Alibaba (BABA): With a massive $91.6 billion cash reserve and an enticing turnaround plan, Alibaba’s attractive valuation presents a strategic investment opportunity.
  • Ingredion (INGR): Despite broader market challenges, Ingredion’s strong dividend yield of 2.83% and robust free cash flow margin of 6.40% highlight its powerful financial health and investor appeal.
Consumer Stocks to Buy Now - 3 Consumer Stocks to Buy Now: Q2 Edition

Source: Shutterstock

Consumer stocks to buy now aren’t just a fleeting trend. As the second quarter (Q2) rolls in, consumer stocks present themselves as excellent bets, offering the dual benefit of steady portfolio growth and attractive shareholder rewards.

Moreover, we’ve seen in recent quarters how the U.S. continues to exhibit robust signs of growth, outperforming analyst estimates. The robust consumer spending environment leads to higher profits and a more stable economic landscape. Despite the possibility of prolonged inflationary pressures, the resilience of the U.S. economy shines through. Its enduring strength underscores why consumer stocks remain compelling for those seeking security and growth amidst the market uncertainty. That said, here are three consumer stocks to buy now that embody the earlier discussion.

E.l.f. Beauty (ELF)

an elf branded beauty product on a stone counter
Source: Lisa Chinn / Shutterstock.com

E.l.f. Beauty (NYSE:ELF) is one of the leading cosmetics businesses, thriving on the back of its unique blend of clean and vegan products with a remarkably affordable price point. It effectively caters to Gen Z’s preferences, with its brand having established a dominant online and social media footprint. Its innovative approach has positioned it as one of the top growth stocks in its niche, with its stock gaining an eye-watering 475% in the past three years.

Looking ahead, its financial outlook remains exceptionally bright. It kicked into gear during the pandemic, delivering double-digit top-line growth, and has continued the momentum since then. Not only has it delivered double-digit sales growth in the past consecutive quarters, but it has also outperformed analyst estimates across both lines.

In the third quarter, its net sales surged 85% year-over-year (YOY) to $270.9 million while besting analyst estimates of $32 million. This momentum is projected to continue, with the company expecting net sales for the year to fall in the $980 million and $990 million range, marking an impressive increase of 69% to 71% compared to the prior year. Moreover, according to TipRanks analysts, ELF stock is a ‘moderate buy’ offering a healthy 28% upside from current price levels.

Alibaba (BABA)

Alibaba Group headquarters sign located in Hangzhou China BABA stock.
Source: Kevin Chen Photography / Shutterstock.com

Alibaba (NYSE:BABA) is a Chinese e-commerce giant that’s flown under the radar in the past few years. Like its peers, the company has weathered its fair share of headwinds alongside the struggling Chinese economy. Current market conditions are far from conducive, but the company remains agile and has multiple long-term growth catalysts, which makes it an attractive bet. Additionally, BABA stock trades at just a forward 1.30 times trailing-twelve-month-sales (TTM), 69% lower than the sector median.

It boasts a massive cash reserve exceeding $91.6 billion, which positions it incredibly well to navigate economic turbulence. Its financial robustness allows the tech giant to push forward with aplomb and undertake potentially risky ventures without the pressure of external financing.

Furthermore, the company continues to refine its core operations and revenue strategies through Taobao and Tmall while actively expanding into burgeoning markets and new business areas. Moreover, new segments, such as the Digital Commerce group and the Cainiao logistics arm, delivered 44% and 27% YOY growth, respectively, in its most recent quarter. Its move into digital commerce and logistics is particularly strategic, as it efficiently taps into the rapid e-commerce adoption across high-growth regions, including Southeast Asia and Latin America.

Ingredion (INGR)

Ingredion Canada Inc head office in Brampton, Ontario, Canada
Source: JHVEPhoto / Shutterstock.com

Ingredion (NYSE:INGR) manufactures diverse ingredient solutions catering to various sectors, from food to textiles. Over the years, it has operated a business that’s exhibited consistent growth across both lines. This growth has been mirrored by its stock, which has gained over 21% in the past three years. However, its excellent dividend profile helps INGR’s stock stand out. It yields a tremendous 2.83% while growing its payouts in the past 13 years, beating the sector median of two years.

While top-line growth in recent quarters has been uninspiring due to multiple headwinds, the company has efficiently maintained its solid profitability profile. For instance, its free cash flow margin of 6.40% beats the sector median by 30%, while its return on common equity is an eye-catching 20%.

Given the company’s role in multiple growing market segments, I expect INGR stock to bounce back in a more conducive business environment.

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/2024/04/3-consumer-stocks-to-buy-now-q2-edition/.

©2024 InvestorPlace Media, LLC