HomeMarket NewsRipe for the Picking: Unearthing 3 Consumer Stocks with Untapped Value

Ripe for the Picking: Unearthing 3 Consumer Stocks with Untapped Value

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The American economic engine revs with vigor, fuelled by robust growth that surpasses prior estimations. The nexus of flourishing consumer activity and amplified business investment propels profits upward, painting a picture of economic robustness. Despite looming shadows of recession and inflation, the US outshines global counterparts, showcasing resiliency and prospects of prolonged growth. An assortment of sectors, from manufacturing to retail and healthcare, hint at a well-rounded and flourishing future.

With wallets open wide and faith in the economy unwavering, consumers are poised to fuel the flame of retail industry expansion. Consumer goods shine with a forecasted CAGR of 3.22%, eyeing a substantial $3.18 trillion milestone in 2024. These optimistic indicators beckon investors to heed the call of top-tier companies, primed for prosperity.

Alibaba (BABA): A Sleeping Giant Awakens

A photo of the Alibaba (BABA) app on a smartphone.

Source: BigTunaOnline / Shutterstock.com

Alibaba (NYSE:BABA) stands as a technology behemoth on China’s soil, reigning over e-commerce, retail, internet, and technology sectors. With a price tag of $72.84, BABA weathered a disheartening 25.99% downturn over the last year. 

Alibaba’s stronghold in e-commerce remains unchallenged, commanding an imposing 50% market share in the Chinese domain. Forecasts portend e-commerce industry growth at a blistering CAGR of 9.47%, catapulting to a monumental $4.9 trillion by 2029. The conglomerate extends its dominion into China’s financial realm through Alipay and cloud computing, boasting astonishing growth rates at 10.35% and 18% CAGR, respectively.  

The fiscal year of 2023 saw Alibaba basking in the glow of stellar numbers, with a 5.98% YOY revenue surge. Jaw-dropping figures included a 22.23% YOY surge in net income and a 21.83% spike in diluted EPS. Alibaba’s levered FCF margin stands head and shoulders above the competition, soaring to a staggering 15.77%, towering over the industry average by a substantial 184.47%. 

Weathering the tempest of the Chinese anti-monopoly crusade, Alibaba’s stock bore the brunt of losses following former CEO Jack Ma’s critique of governmental policies. The market, ill-informed and short-sighted, grossly undervalues this industry titan with a lion’s share of the market. As Alibaba aligns its focus on enhancing customer experience and nurturing an ecosystem within the Chinese domain, the trajectory for growth is luminous and unbridled. Alibaba’s underestimation by the market presents a delectable opportunity for investors to taste the fruit of prosperity.

Lululemon Athletica (LULU): Flexing its Muscles

A close-up picture of the Lululemon (LULU) sign in the Hong Kong airport.

Source: Sorbis / Shutterstock.com

Lululemon Athletica (NASDAQ:LULU) emerges as a beacon in the athletic apparel landscape. Priced at $377.15, LULU enjoys a 2.62% upsurge from yesteryear.

LULU’s revenue dance escalated from $9.18 billion in 2023 to an impressive $9.61 billion in 2024, marking a substantial 4.72% upswing. The Gross Profit Margin shone brightly at 58.31%, outstripping the sector median by a whopping 62.58%. EBIT Margin (TTM) stood tall at 22.95%, a remarkable 201.53% higher than the sector median of 7.61%. These metrics paint a picture of stability, profitability, and unwavering consistency, casting LULU as a coveted gem in the investor’s treasure trove.

Lululemon’s recent foray into men’s apparel addresses a prior Achilles’ heel, diversifying its market appeal beyond just the female demographic. The introduction of brand-new running and trail running shoes aims to seize a considerable slice of the athletic footwear pie, expanding LULU’s consumer reach manifold. As sales reflect this strategic pivot, stock prices are poised to scale new heights, earning LULU a shimmering “Buy” mandate.

Ingredion (INGR): A Recipe for Success

Ingredion Canada Inc head office in Brampton, Ontario, Canada

Source: JHVEPhoto / Shutterstock.com

Ingredion (NYSE:INGR) crafts and dispenses sweeteners, starches, nutrition ingredients, and biomaterial solutions harvested from wet milling and processing of corn and other starch-based materials, pervading diverse global markets. Its wares find utility across industries ranging from food to textiles.

Earnings forecasts hold steadfast, with results consistently outstripping expectations, espousing management’s deftness. Prognostications feature an alluring projected growth potential of approximately 49%. A 7.88% profit margin, coupled with a 10.41% operating margin and a 19.12% return on equity, attest to management’s mettle and dexterity. INGR garners a “Buy” accolade on Yahoo! Finance alongside bullish commendations from financial stalwarts such as Goldman Sachs and Stephens & Co.

INGR’s diversification into sector-specific products augments growth horizons and bolsters stability, positioning it as a formidable player in the market arena. FCF and DCF models unveil a cash flow expansion spectacle, rendering this stock severely undervalued. 

Fortified by diversification, INGR stands firm against the tumultuous tides, boasting an upwards trajectory in annual earnings projected for the next three years. This underrated gem sparkles brightly, beckoning astute investors to partake in its promising growth narrative.

As of the publication date, Michael Que held no positions (neither direct nor indirect) in the securities discussed. The views expressed in this article reflect the author’s opinions, in accordance with the InvestorPlace.com Publishing Guidelines.

The researchers contributing to this article also had no positions (neither direct nor indirect) in the securities mentioned.

Michael Que, a seasoned financial writer with a rich background in the technology domain, has been featured on esteemed platforms such as Seeking Alpha, Benzinga, and MSN Money. He spearheads Que Capital, a research entity that melds fundamental analysis with ESG principles to unearth sustainable long-term investment opportunities.

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The post The 3 Most Undervalued Consumer Stocks to Buy in April 2024 appeared first on InvestorPlace.

The opinions expressed in this article are those of the author and do not necessarily reflect the views of Nasdaq, Inc.

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