Consumer sentiment has continued to slide since 2020 as soaring inflation has cranked up living costs, putting financial pressure on consumers across America.
As a result, several consumer-facing companies, proven world-class businesses, have struggled as shoppers cut back. The economy fluctuates, and while this has been a tough stretch for many, brighter days are likely ahead.
Long-term investors may be wise to consider buying these blue chip companies while their stocks are down amid negativity and soft consumer spending.
Here are my three favorite examples of stocks worth buying right now.
Image source: Amazon.
1. Amazon will continue to ride e-commerce to long-term growth
E-commerce giant Amazon (AMZN +1.77%) isn't even down that much, just 10% from its all-time high. Yet, it feels like the stock has much more to give. The e-commerce giant has entrenched itself as the runaway leader in U.S. online retail, with a market share of nearly 40%. Remarkably, online shopping still represents just 16% of total retail spending in America.
NASDAQ: AMZN
Key Data Points
Amazon is pushing harder into new categories, like fresh grocery, where it will offer same-day delivery in over 2,300 U.S. cities and towns by year's end. It's the next phase of the e-commerce war, where it's fighting with Walmart to be the one-stop shop where Americans spend their money. Additionally, Amazon has also entered the automotive industry, so you can now buy vehicles online.
However, Amazon's appeal isn't just in e-commerce; it's also in its complementary businesses, including cloud services, digital advertising, and video streaming. Analysts see Amazon growing earnings by an average of 20% annually over the next three to five years, making the stock a strong buy at a PEG ratio of just over 1.5 today.
2. This dividend stock has brighter days ahead
Clorox (CLX +0.16%) isn't the largest consumer goods company, but it has compiled decades of excellence, evidenced by its 48 consecutive annual dividend increases. It's known most for its namesake cleaning products brand but has steadily expanded over the years, now owning several leading niche brands, such as Hidden Valley Ranch, Kingsford Charcoal, Burt's Bees, and more.
NYSE: CLX
Key Data Points
The company has had a tumultuous five years. It saw unprecedented demand for its products during the pandemic. Just as it had ramped up production, it felt enormous cost pressure as inflation surged. Then, it suffered a severe cybersecurity breach and has since transitioned to a new ERP system, which is always disruptive to a manufacturer.
Fortunately, Clorox remains a top-notch business, evidenced by its juicy 25% ROIC. Analysts expect Clorox's earnings to bottom this year and begin rebounding in 2026. The stock trades at less than 16 times next year's earnings estimates, making it a beaten-down blue chip dividend stock at a bargain valuation.
3. Peace of mind from this Dividend King
PepsiCo (PEP +0.51%) has struggled over the past couple of years as consumers pull back from name-brand snack foods. The company's growth has slowed, dragging PepsiCo's stock down by about 25% from its high. However, there's no mistaking the company's firm presence in your local grocery store, with a portfolio chock-full of beloved beverages and snacks.
NASDAQ: PEP
Key Data Points
There is also the threat of weight loss drugs, which curb appetites in patients. However, PepsiCo is aggressively adapting to health trends, acquiring up-and-coming brands like Siete Foods and poppi, and announcing new versions of existing foods. For example, it launched Naked Doritos, which don't have any artificial dyes or flavors.
Meanwhile, PepsiCo's stock has a solid starting yield of 3.8%, is a Dividend King (a company that has raised dividends annually for 50 years or more), and analysts see the business continuing to grow earnings by 3% to 4% over the next three to five years. The stock currently trades at 18 times 2025 earnings estimates. That's lower than PepsiCo's long-term norms. It's fair for such a dependable company with slower growth, and leaves room for upside if that growth ultimately reaccelerates.
