Investing in consumer stocks, particularly in the consumer staples sector, suits investors seeking reliability and stability in their portfolios. Consumer staples, such as food, beverages and household goods, are necessities that maintain consistent demand regardless of economic conditions. Companies in this sector often generate steady revenue and pay reliable dividends, offering a haven for investors during economic downturns. When considering undervalued consumer stocks, look for companies with a history of consistent sales, high dividend yields and reasonable valuations. This will maximize potential returns and mitigate risks associated with competition and pricing pressures.
But we are making your life easier by recommending the following three companies as the top three undervalued consumer stocks to buy. These three options provide the best growth and profit opportunity. Invest now!
GoDaddy (GDDY)
GoDaddy (NYSE:GDDY) is the world leader in domain registrars and web hosting. It is currently listed at $131.90; most analysts rate it a “Buy.”
Over the past year, GoDaddy has shown excellent financials, with revenue constantly growing steadily. YOY, EPS growth was up by a hefty 314.61%, and net income growth also showed outstanding stats. The company saw a growth of 422.2%, achieving a new record in its net income. GoDaddy has promising FCF growth, as its FCF grew 10.68% in 2023.
The IT sector is growing at a CAGR of 8.3% and is projected to reach $12417.21 billion by 2028. One driving factor is the need for IT services in the cloud computing industry. Statistics show that in 2021, 94% of all workloads used cloud computing, making IT services a widespread future need.
GoDaddy recently started utilizing more AI technology within its services. Additions such as AI-powered onboarding and client management have positioned GoDaddy well with AI. We can safely expect more innovations like this in the future.
Overall, GoDaddy exemplifies steady financials, especially within the last quarter. The company has lots of room for innovation, making it easily one of the best undervalued consumer stocks of 2024.
Toyota (TM)
Toyota (NYSE:TM) is an automotive manufacturing company based in Japan. It is valued at $231.78, an increase of 68.19% YoY.
Toyota’s market cap is valued at $312.18 billion as of 2024, a 32.8% increase from 2023-2024. In addition, the company experienced a 3M Price Performance of 3.68%, a massive 2,643.44% increase from the sector median of 0.13%. TM’s revenue was $310,054.2 billion, a revenue growth of 22.87%, 685.79% more than the sector median. Cash From Operations TTM was $8.01 billion and is 2,639.12% more than the sector median of $292.39 million. These metrics indicate Toyota’s massive momentum, profitability and growth potential and depict it as a stock with a high upside.
The global automotive industry was valued at $3,564.67 billion in 2023 and is expected to reach $6,861.45 billion by 2033. Key prospects for this monumental growth include urbanization and a rise in innovation regarding EVs and hybrids.
Toyota has announced a record investment in electric vehicles and AI, showing it isn’t willing to stop its momentous growth. It is attempting to innovate EVs and add extraordinary AI aspects to them. This project is massive for the industry, and TM’s taking the lead shows its confidence and expertise. The execution of this project, paired with Toyota’s already impressive financials, prompts me to give this consumer stock a “Buy.”
Mondelez (MDLZ)
Mondelez (NASDAQ:MDLZ) is one of the world’s largest snack companies. It has the second highest market share in the chocolate category globally, third in cakes and pastries and first in biscuits.
The snack foods market, valued at $256.26 billion in 2023, is expected to reach $559.26 billion by 2028. This presents MDLZ with many growth opportunities. As consumer demand for snacks increases, the company can leverage its dominant market position to achieve higher revenues.
MDLZ has already begun to capitalize on the market’s growth, as seen in its Q1 2024 earnings report. First, the snack giant saw EPS jump 16.3% YoY to $0.95, while free cash flow increased to $1 billion. Moreover, gross profit surged 37.8% YoY to $4.75 billion as net income soared 81.2% to $2.73 billion.
The most significant contributor to the company’s lucrative Q1 has been its success in emerging markets, which now account for 39% of MDLZ’s total revenue. Management has stated that the company plans to leverage this momentum to grow its business by distributing to more retailers and acquiring other companies. MDLZ has already started along this path through recent acquisitions of Clif Bar and Ricolino, which provide the company with a significant presence in high-growth emerging markets that position the company well going forward.
Given MDLZ’s high growth, its forward EV/EBITDA ratio of only 15.09 makes it an attractive investment and a must-buy consumer stock in May 2024.
On the date of publication, Michael Que 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.
The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
