However, there is a problem. Some consumer stocks have astronomical valuations and limited upside potential, so they aren’t worth the investment. Luckily, these undervalued consumer stocks don’t have that problem. Investors have the potential to realize long-term returns with these top picks.
Costco (COST)
Costco (NASDAQ:COST) operates hundreds of warehouses worldwide. The company’s vast presence and millions of Costco members have resulted in impressive gains for long-term shareholders. The stock is up by 24% year-to-date (YTD) and has gained 216% over the past five years.
Costco trades at a 50 P/E ratio and offers a 0.57% yield. The company recently reported Q3 of 2024 results which pointed to rising revenue and profit margins. The firm reported 6.6% year-over-year (YOY) revenue growth which included a 20.7% YOY increase in e-commerce sales.
Most of Costco’s warehouses are in the U.S., with 605 of its 878 facilities in the U.S. and Puerto Rico. Also, COST has 108 stores in Canada. This numbers demonstrate that while Costco is gaining global market share, it still has plenty of opportunities. For instance, Costco only has seven warehouses in China and two in France. Therefore, the company still has lots of runway to expand.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) is another top choice for many consumers due to the online marketplace’s vast product catalog. You can easily find millions of items and receive them within 1-2 business days. Amazon has invested billions of dollars into faster shipment times which has redefined consumers’ expectations.
Further, the stock has been on an exceptional run. Shares are up by 18% YTD and have almost doubled over the past five years. The stock trades at a 49.5 P/E ratio and more than tripled its net income YOY in Q1 of 2024. Net sales increased by 13% YOY in the quarter.
Amazon is a leader in e-commerce, grocery shopping and other consumer categories. However, its ventures into cloud computing and artificial intelligence (AI) can ignite additional growth. Amazon Web Services (AWS) revenue increased by 17% YOY to reach $25.0 billion. That’s an acceleration compared to results from the previous quarter.
Finally, Amazon has plenty of Wall Street analysts who are bullish on the stock. The average price target implies a 25% upside. Currently, it’s rated as a strong buy by 43 analysts.
Deckers Outdoor (DECK)
Deckers Outdoor (NYSE:DECK) is a consumer stock that has been winning more attention ever since the company gotadded to the S&P 500 index. The stock is up by 62% YTD and has gained an impressive 582% over the past five years.
The company is the corporate entity behind UGGS and HOKA. These iconic brands have been garnering attention and plenty of revenue while established athletic apparel leaders continue to lose market share.
Deckers Outdoor reported 21.2% YOY net sales growth in Q4 of 2024. Domestic sales increased by a solid 19.4% YOY while international sales were up by 25.2% YOY. HOKA sales drove most of the growth, coming in 34.0% higher than the same period last year. HOKA sales came in at $533.0 million while UGG brand sales came in at$361.3 million.
The athletic apparel company’s Q4 growth rates were an acceleration from full-year results. The company achieved 18.2% YOY sales in fiscal 2024. The acceleration combined with a 39.0% YOY increase in net income suggest that the stock can continue to log additional gains.
On this date of publication, Marc Guberti held long positions in AMZN and DECK. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.