Investors may want to shift their focus to the consumer space for attractive stock opportunities as the new year approaches, particularly amid the fluctuating landscape of technology stocks. Analysts are highlighting three specific companies poised for growth in this sector.
Amazon has recently drawn attention for its low valuation, which has reached some of the lowest points in its history. Despite these challenges, the e-commerce giant is actively enhancing its business operations through advancements in robotics and artificial intelligence (AI). Currently, Amazon boasts over 1 million robots in its fulfillment centers, all effectively coordinated by the company’s DeepFleet AI model. This integration of AI extends beyond automation; it optimizes various logistics processes, improving delivery speed and cost efficiency. The AI also bolsters Amazon’s advertisement business, contributing to its high gross margins.
Amazon Web Services (AWS), the company’s cloud computing arm, is anticipated to experience accelerated growth as it increases its capital expenditures to meet the rising demand for AI services. Partnerships with major players like Anthropic and OpenAI further position AWS for substantial gains in the upcoming years.
Another notable performer in the consumer sector is Dutch Bros, a rapidly growing coffee shop chain that has successfully driven same-store sales through innovative mobile ordering, menu diversification, and targeted marketing campaigns. Dutch Bros is planning to introduce hot food items, which have previously shown to boost sales by 4% in test locations. With aspirations to double its number of locations from under 1,100 to more than 2,000 by 2029, the company is well-positioned for expansive growth.
e.l.f. Beauty rounds out the trio of recommended stocks, especially following its recent acquisition of skincare brand Rhode. Before joining e.l.f., Rhode had already experienced significant sales growth with a minimal product lineup and marketing budget. The acquisition is set to facilitate Rhode’s entry into broader retail distribution, beginning with Sephora and eventually expanding to outlets like Ulta Beauty. Moreover, e.l.f. has opportunities to diversify its product offerings and capitalize on marketing synergies.
The overall market perception of e.l.f. Beauty remains optimistic, especially considering its reasonable valuation—trading at approximately 22.5 times its forward price-to-earnings ratio along with a notably low price/earnings-to-growth ratio of below 0.4, indicating potential undervaluation.
As these companies work to implement their growth strategies, they present compelling investment opportunities for those looking to venture into the consumer space as part of their portfolios heading into the new year.
