While technology stocks get a lot of the press, there are also a lot of of attractive options in the consumer goods space as well. Let's look a four options I'd buy without any hesitation.
Amazon
While often classified as a consumer goods stock, Amazon (AMZN 2.11%) is really the combination of a consumer goods and technology company. It operates the largest e-commerce and logistic company in the world, where it sells both its owns goods and those from third parties on its platform. This continues to be a steadily growing business, with its North American sales rising 9% last quarter and international sales up 12%.
Operating income for its retail businesses has been growing even more quickly, as the company has been using AI to help improve efficiency both within its warehouses and its logistic routes. It has also continued to see strong growth in higher-margin sponsored ads, off of what it already a pretty large base.
Amazon's largest business by profitability, though, is its AWS cloud computing business. The business is growing quickly with revenue up 19% last quarter, as the company provides foundational models and helps customers build out their own artificial intelligence (AI) models and applications through its BedRock and SageMaker solutions. It is currently the largest cloud computing company in the world with a 31% market share.
Amazon has a long history of innovation and investing to win, and this ethos should lead it to be a long-term winner.
Image source: Getty Images
Philip Morris International
Philip Morris International (PM 1.83%) is a rare combination of a growth stock in a defensive industry. With no U.S. exposure when it comes to traditional cigarettes, this part of the company's business is still growing through a combination of price increases and modest volume growth. However, Philip Morris' big growth driver has been its smokeless portfolio.
The company has seen huge growth from Zyn, a nicotine pouch made with nicotine powder and flavoring instead of tobacco. Last quarter, sales for the product continued to surge, with volumes jumping nearly 44%. Meanwhile, its also seeing solid growth with its heated tobacco IQOS system, with volumes rising nearly 9% last quarter. The company has bought back the IQOS license for the U.S. and could look to introduce the product on a wider scale next year. It is currently looking to get the latest version of the product approved by the FDA, while testing an older version in a few select U.S. cities.
One big positive for Philip Morris is that both Zyn and IQOS have considerably better unit economic than its traditional cigarettes. It has said that Zyn in the U.S. has a six times greater product contribution level than cigarettes, while IQOS has at least two times better unit economics.
With strong volumes and better unit economics for its smokeless products, Philip Morris is in a strong position moving forward.
E.l.f. Beauty
While its stock had a down year in 2024, e.l.f. Beauty (ELF -6.66%) has been a huge winner the past five years, with the stock up more than 650% over that stretch as of this writing. The company has been able to take tremendous market share in the mass cosmetics space in the U.S. the past few years. That could be seen in its huge 40% revenue growth last quarter.
E.l.f. has a strong following among younger demographics. It has successfully used a fast-follower product strategy of replicating popular prestige brand items at much cheaper prices while using social media influencers to market its products. This in turn has led to store shelf gains and better product placements, all of which have fed into its gains.
Meanwhile, the company still has a large opportunity in the adjacent skincare category, where is has a smaller presence, as well as in international markets. Thus far its moves in these areas have been successful, and there is still a big opportunity in front of it.
Trading at a forward price-to-earnings ratio (P/E) of 27.7 times based on fiscal 2026 estimates (ending March) and a price/earnings-to-growth ratio (PEG ratio) of 0.52, e.l.f is a cheap growth stock.
JAKKS Pacific
JAKKS Pacific (JAKK 2.04%) saw a big upgrade in the executive suite a few years ago when it hired John L. Kimble as CFO following his stints at Walt Disney and Mattel. Meanwhile, over the past five years the stock is up about 165% as of this writing.
Kimble has helped turn the company around and laid the groundwork for its continued solid performance. Nonetheless, the stock is one of the cheapest around, trading at a 6.5 times forward P/E and under 0.3 PEG. Notably, it's also debt free.
A weak kids movie slate hurt the stock in early 2024, but it could see a nice boost from the success of Moana 2 and Sonic 3 at the box office. Both franchises have helped JAKKS toy sales in the past, and both had very strong showings in theaters. Sonic 3 was the best performing movie of the franchise, while Moana 2 was a blockbuster, grossing over $1 billion globally.
JAKKS has also been focused on making its non-licensed business bigger, with a focus on evergreen content. It also previously signed a deal with Authentic Brands, owner of Roxy, Juicy Couture, Quicksilver, and other brands, to make items such as beach accessories, skateboards, roller skates and other items that it just began to roll out in the fall of 2024.
With an improved box office slate, the Authentic Brands deals, and a very cheap stock price, JAKKS Pacific in an under-the-radar stock to consider buying.
