Four Consumer Goods Stocks Worth Your Investment
While technology stocks often steal the spotlight, various attractive options exist in the consumer goods sector. Here are four picks that stand out for potential investors.
Amazon: A Dual Powerhouse
Amazon (NASDAQ: AMZN) is typically seen as a consumer goods company but operates primarily as both a retail and technology giant. It manages the world’s largest e-commerce platform, showcasing products from both its own inventory and various third-party sellers. This business remains robust, evidenced by a 9% increase in North American sales and a 12% rise in international sales last quarter.
Moreover, the company’s operating income has surged, largely due to the implementation of artificial intelligence (AI) that boosts efficiency in warehouses and on delivery routes. The profitability of its sponsored ads has also seen impressive growth.
The most lucrative segment, however, is Amazon Web Services (AWS), which is a key player in cloud computing. Last quarter, AWS’s revenue climbed 19%, fueled by their funding of AI developments through tools like BedRock and SageMaker. Amazon commands a significant 31% share of the cloud infrastructure market.
Amazon’s long-standing commitment to innovation positions it well for continued success.
Image source: Getty Images.
Philip Morris International: Growth in Tobacco Alternatives
Philip Morris International (NYSE: PM) is a unique example of a growth stock within a traditionally defensive sector. While its conventional cigarette segment lacks U.S. exposure, it still reports growth driven by price hikes and slight volume increases. The true growth driver, however, lies in its smokeless product line.
The nicotine pouch Zyn has gained immense popularity, with last quarter sales soaring nearly 44%. Additionally, sales for its heated tobacco product, Iqos, rose nearly 9% during the same period. Philip Morris reacquired the Iqos license for the U.S. from Altria, intending to launch it more widely in the upcoming year, pending FDA approval.
Notably, Zyn and Iqos demonstrate significantly improved financial metrics compared to traditional cigarettes; Zyn’s product contribution is six times higher than that of cigarettes, while Iqos’s is at least twice as profitable.
e.l.f. Beauty: Affordable Cosmetics Powerhouse
Despite a challenging year in 2024, e.l.f. Beauty (NYSE: ELF) has excelled over the past five years, reflecting a remarkable 650% stock increase. It has successfully captured market share in the U.S. mass cosmetics sector, highlighted by a 40% revenue growth year-over-year last quarter.
e.l.f. resonates with younger consumers, leveraging a strategy that mimics successful high-end products at affordable prices while engaging social media influencers for marketing. These tactics have enhanced their visibility on store shelves.
The company is also expanding its skincare lines and exploring international markets, both of which have shown promising results. Currently, with a forward price-to-earnings (P/E) ratio of 27.7 based on fiscal 2026 estimates and a price-to-earnings-to-growth (PEG) ratio of 0.52, e.l.f. is considered a relatively inexpensive growth investment.
JAKKS Pacific: Revitalized Toy Company
JAKKS Pacific (NASDAQ: JAKK) made significant leadership changes when they appointed John L. Kimble as CFO. His past experiences at Walt Disney and Mattel have led to a turnaround for the toy manufacturer, which has seen its stock increase by about 165% over five years.
Under Kimble, JAKKS has prepared itself for future growth, but it remains one of the more affordable stocks in the market today, trading at a forward P/E of 6.5 and a PEG under 0.3. Notably, it also has no debt.
Weak performances in children’s movies affected the stock earlier this year. However, the release of fan-favorite titles like Moana 2 and Sonic 3 at the box office has historically boosted toy sales for JAKKS, which may be the case again as both franchises perform strongly in theaters.
JAKKS is also expanding its non-licensed product offerings and has partnered with Authentic Brands to produce a variety of items, ranging from beach accessories to skateboards, set to launch in fall 2024.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Geoffrey Seiler has positions in JAKKS Pacific, Philip Morris International, and e.l.f. Beauty. The Motley Fool has positions in and recommends Amazon, Walt Disney, and e.l.f. Beauty. The Motley Fool recommends Philip Morris International. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
