Although recent inflation has severely reduced its real-world purchasing power, $1,000 is still a lot of money for most people. And for investors looking to put that money to work, the stock market offers reasonably priced equities now which can turn that money into significantly more over the long term.

Let's discuss two ideas: cigarette maker Altria Group (MO -0.33%) and discount retailer Dollar General (DG 4.39%). Both could make excellent buys today.

Altria Group

Up 5% in the trailing 12 months, Altria's stock has dramatically outperformed the S&P 500, which has dropped roughly 15% in the same period. The large-cap tobacco company can continue to hold its own because of its stable business model and the shedding of risks related to its investment in vaping start-up Juul Labs

A $100 bill with a green ascending arrow.

Image source: Getty Images.

In 2018, Altria paid $12.8 billion to acquire a 35% stake in Juul, which was valued at $38 billion at the time. Since then, the investment has been a drag on Altria's performance as Juul was hit by a series of regulatory headwinds culminating in its products being banned by the Food and Drug Administration (FDA) (although that decision is currently suspended pending an appeal). The good news is that Juul-related headwinds are likely already baked into Altria's stock price, and investors can finally move on. 

As of June 30, Altria has written down its Juul stake by 96.5% to $450 million. And in September, it ended its noncompete agreement with Juul amid plans to build its own portfolio of e-vapor products -- a market opportunity projected to expand at a compound annual growth rate (CAGR) of 16% to $42.9 billion by 2028, according to market research group Facts & Factors. In the meantime, Altria's traditional tobacco business remains a stable and profitable foundation. 

Management expects full-year earnings per share to grow by 4.5% to 6% (to between $4.81 and $4.89). And the company returns value to shareholders through a generous dividend yielding 8%. With a forward price-to-earnings multiple of 9.6, the shares are cheaper than the S&P 500 average of 21.

Dollar General 

Up 12% over the last 12 months, Dollar General stock is another excellent pick for investors who want to duck the bear market. The company's discount business model makes it recession resistant. And a reasonable valuation could position it for continued success. 

According to an October poll of economists conducted by Bloomberg, 60% expect the U.S. economy to enter a recession in the next 12 months. For most companies, an economic slowdown would be bad news because it erodes consumer purchasing power. But Dollar General thrives in these situations because it presents people with lower-priced alternatives to pricier big-box retailers. 

But Dollar General doesn't necessarily need a recession to grow. Third-quarter net sales jumped $11.1% to $9.5 billion as the company continues to enjoy healthy same-store-sales growth and location expansion -- adding 734 new stores to bring its total to 18,818. Dollar General is also becoming increasingly popular with higher earners. According to CEO Todd Vasos, it has started attracting more customers earning six-figure salaries looking to save money as inflation pushes up the cost of living. 

With a forward price-to-earnings multiple of 19.8, Dollar General is only slightly cheaper than the S&P 500 average. But the company looks like a good deal considering how well-positioned it is to handle the current macroeconomic challenges. 

Which company is best for you?

Dollar General and Altria are both excellent picks for value investors who want to protect their portfolios against challenges like recession and inflation, but they serve slightly different investment strategies. With its lower valuation and massive dividend, Altria is the more defensive option. Dollar General stock is more expensive but probably has more long-term growth potential.