The 3 Most Undervalued Consumer Stocks to Buy in April 2024
The United States economy is showing robust signs of growth, with the latest data indicating faster expansion than previously estimated. Strong consumer spending and increased business investment are key drivers, leading to higher profits and a more stable economic landscape. Despite concerns about recession and inflation, the economy continues to outpace global peers, demonstrating resilience and potential for sustained growth. This positive trajectory is supported by various sectors, including manufacturing, retail and healthcare, indicating a well-rounded and promising outlook for the future.
With this strong consumer spending and indicated confidence in the economy, we can be sure that people will continue to spend and allow the retail industry to grow. The consumer goods sector has a projected CAGR of 3.22%, reaching $3.18 trillion in 2024. We can see all of these positive indicators for the industry, if you buy these top three leading companies you are sure to profit greatly.
Alibaba (BABA)
Alibaba (NYSE:BABA) is a multinational technology company based in China focusing on e-commerce, retail, internet and technology. Valued at $72.84, BABA saw a negative growth of 25.99% in the past year.
Alibaba maintains its dominant figure in e-commerce, boasting a 50% market share in China. The e-commerce industry is expected to grow at a CAGR of 9.47% to $4.9 trillion by 2029. The company also dominates China’s finance payment system through Alipay and cloud computing, both growing at a CAGR of 10.35% and a CAGR of 18% respectively.
The company continues to report strong earnings with revenue YOY growth of 5.98% in the fiscal year of 2023. More impressive figures show 22.23% YOY growth in net income and 21.83% in diluted EPS. Alibaba’s levered FCF margin outperforms the market at a staggering 15.77%, over 184.47% larger compared to the industry average of 5.54%.
Alibaba continues to dominate China’s e-commerce, finance and technology markets and rapid expansion throughout the world. Alibaba’s stock suffered great losses from the Chinese anti-monopoly crackdown as a result of the previous CEO, Jack Ma, criticizing the Chinese government’s practices. Therefore, the market has completely undervalued a company with solid financials and industry dominance — something investors should consider. Alibaba plans to focus on customer experience and building an ecosystem within China furthering Alibaba’s growth. In conclusion, Alibaba is extremely undervalued by the market and is destined for mouth-watering growth in the future.
Lululemon Athletica (LULU)
Lululemon Athletica (NASDAQ:LULU) is an athletic apparel retailer. The stock is currently valued at $377.15, a 2.62% increase from last year.
LULU saw revenue grow from $9.18 billion in 2023 to $9.61 billion in 2024 representing an increase of 4.72%. The Gross Profit Margin was also substantial at 58.31% or 62.58% more than the sector median of 35.87%. EBIT Margin (TTM) was monumental as well at 22.95%, 201.53% more than the sector median of 7.61%. These metrics indicate stability, profitability and consistency making LULU a gem for all investors looking for massive returns.
Lululemon has recently expanded its offerings to include men’s apparel. Previously, this was one of LULU’s major flaws as it only marketed towards females; however, this recent expansion has opened up a brand new market for it. It also launched brand-new running and trail running shoes in an attempt to gain a large slice of the athletic footwear market. These new launches expand LULU’s reach of customers while increasing the addressable market. Sales will reflect this and it will see its stock price rocket, therefore prompting me to give it the “Buy” rating.
Ingredion (INGR)
Ingredion (NYSE:INGR) manufactures and sells sweeteners, starches, nutrition ingredients and biomaterial solutions derived from wet milling and processing corn and other starch-based materials to a range of global markets. Its products are used in industries ranging from food to textiles.
Earnings estimates are relatively stable, with earnings consistently meeting or exceeding projections, showing management’s proficiency. Simply put, Wall Street analysts predict a growth potential of around 49%. A profit margin of 7.88%, an operating margin of 10.41% and a return on equity of 19.12% show management’s efficiency and competence. INGR has a “Buy” rating on Yahoo! Finance and bullish ratings from financial institutions such as Goldman Sachs and Stephens & Co.
The consumer goods industry strength is complemented by INGR’s diversification into sector-specific products, which opens up both growth potential and stability. This puts INGR in a great position. FCF and DCF models show impressive cash flow growth, making this stock immensely undervalued.
Diversification leads this stock to be much more stable than its counterparts. Additionally, annual earnings are forecast to grow for the next 3 years. All this makes this undervalued stock a great pick.
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.
