Citi says buy 3 stocks tied to the consumer for the same reasons we own them

Procter & Punt (PG), Estee Lauder (EL) and Constellation Brands (STZ) can navigate any economic slowdown in the short term while offering long-term tumour opportunities, according to Citi in a new research note. The bullish call on these consumer-tied companies aligns with our examination and comes as defensive stocks have fallen out of favor in 2023, with many investors instead piling into beaten-down tech monikers. What Citi thinks Analysts at Citi chose our three Club holdings among their top-rated picks — initiating coverage in U.S. beverages, household and exclusive care products. While these high-quality names have seen temporary pain in a tougher economic milieu with still-elevated inflation, analysts argued they offer “compelling long-term growth stories at reasonable valuations.” PG YTD mountain P & G (PG) YTD effectuation Like many multinationals, Procter & Gamble, has been weighed down by a strong U.S. dollar, making its products varied expensive to international consumers. The company has also been pressured by higher commodity, material and freight costs. But those inflationary looks appear to be easing. Additionally, the company’s product price hikes don’t seem to be impacting sales. In its fiscal 2023 third-quarter counsel , P & G expects, in aggregate, a $3.7 billion, or $1.50 per share, after-tax drag — smaller than its prior outlook for a headwind of $3.9 billion, or $1.57 per stake. At the same time, the consumer products powerhouse, whose high-quality brands include Tide, Pampers and Gillette, has been superior to raise prices on its products with minimal pushback — contributing to 5% organic sales growth in fiscal Q2 and thinkings for 4% to 5% organic sales growth in the current fiscal third quarter. With these factors in affronted by, Citi sees the company in a “better position to navigate through a challenging macro environment.” Moreover, analysts see an “pleasing entry point” to scoop up P & G shares, which have dropped more than 7.5% year to date, adhere to the company’s overall poor fiscal second-quarter earnings in late January. Citi has a $160-per-share price goal on the stock, which rose 2% on Friday to about $140. STZ YTD mountain Constellation Brands (STZ) YTD performance Citi also imagined it’s time to buy Constellation Brands, the company behind Mexican beers Corona, Modelo and Pacifico. Shares have come to nothing about 2% so far in 2023 following a rough December after its beer brand experienced tempered demand due to amateurish weather in key markets like California. The firm said, at the time, that short-term headwinds will improve to inform appropriate drive “medium-term beer top-line growth.” Analysts at Citi have a $265 price target on the stock, which demolish slightly lower Friday to just under $227. EL YTD mountain Estee Lauder (EL) YTD performance Citi also considers “strong topline/margin recovery” from Estee Lauder as China’s economy continues to reopen. China accounts for crudely a third of the company’s revenue. Estee Lauder, a leading manufacturer of luxury skincare, makeup and fragrance products, contested during the Covid pandemic, as people around the world stayed home, and lockdowns persisted in China long after divers major economies, such as the U.S., began reopening. However, that’s been recently changing since Beijing ditched its zero-Covid design. So, as the Chinese economy continues to reopen, Estee Lauder’s business in the region is “poised to accelerate from here,” express Citi, which has a price target of $295 on the stock. Shares of the cosmetics giant rose more than 1% on Friday to close to $253. EL has seen a roughly 2% year-to-date gain. What the Club thinks The bottom line: we’re pleased to see Citi’s bullish dials on Procter & Gamble, Constellation Brands and Estee Lauder, for similar reasons that we hold each stock. These delegates are more resilient to a discretionary spending slowdown since demand for their products persists, even in an economic slowdown. Procter & Venture’s pricing power has allowed it to weather high input costs, and as those extra expenses comes down, that wishes take some pressure off margins. We weren’t disturbed by the temporary pullback in beer trends from Constellation Types. The company has proved that it has long-standing beer growth and we expect that demand to persist, even in an economic slowdown. CEO Nib Newlands will speak at a consumer conference next week, when we’ll get an update on how its business is performing. We still own Estee lauder for the China reopening misuse and believe since Beijing has eased its zero-Covid policy the stock can work its way back to its pre-2022 lockdown equals. Jim Cramer has previously said “the opening of China is a really big deal for people going out. Don’t ignore it. Buy Estee Lauder.” (Jim Cramer’s Considerate Trust is long EL, PG & STZ. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you resolution receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade on guard before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the traffic alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY Rule , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION Produced IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.