Stocks to buy

Consumer confidence is a leading economic indicator and can forecast forward-looking economic performance. With consumer confidence recently hitting its lowest level in 16 months, that’s not a great sign for the stock market. Accordingly, finding high-quality stocks to buy in this environment can seem tricky.

Companies in the consumer discretionary, non-essential, or durable goods sectors remain more uncertain regarding their financial outlook. As consumers save more and spend less, the financials of companies operating in these sectors can take a hit.

That said, not all companies are created equal. Various blue-chip stocks with competitive advantages can weather the storm. Indeed, we’ve seen a bifurcation with respect to performance in these sectors.

I’m going to highlight three companies I think are great picks right now, despite consumer confidence being low. These stocks may be surprising, but they are worth your consideration today.

HSY Hershey $233.65
CMG Chipotle Mexican Grill $1,635.35
ORLY O’Reilly Automotive $712.10

Hershey (HSY)

Source: George Sheldon /

Hershey (NYSE:HSY) is a world-class purveyor of confectionary products that doesn’t really need any introduction. With Halloween on the horizon, investors can look forward to seeing Hershey chocolate bars everywhere.

However, aside from Halloween and the holidays which typically provide catalysts for this company, performance has been very strong this year. In fact, HSY stock has outperformed the broader market by around 30%. Why?

Hershey is one consumer discretionary play that has historically been a solid performer during times of low confidence. A Hershey bar is an inexpensive treat, even in times of trouble. And when everyone’s stressed out, customers may be more willing to spend on a low-cost indulgence.

The company’s recent results have been strong, noting revenue growth of more than 19%. Thus, for those looking for a defensive consumer discretionary stock with room to grow in bad economic times, Hershey is a great pick.

Chipotle Mexican Grill (CMG)

Source: Northfoto /

Chipotle Mexican Grill (NYSE:CMG) is another interesting option to consider in the food realm. This provider of quick-service restaurants is among the leading Mexican chains in the U.S. and around the world. For those looking for a low-cost option amid rising food prices, Chipotle could continue to gain steam.

Recently, the company posted its second-quarter results, with earnings that beat consensus estimates. Brian Niccol, the CEO and chairman of Chipotle, stated that the company is pleased with the firm’s Q2 performance at a time of consumer uncertainty and inflation.

The company’s total revenue in Q2 came at $2.21 billion, a 17% increase from last year’s second quarter. The hike in total revenue was driven by an increase of 10.1% in comparable restaurant sales and the opening of new restaurants. Chipotle opened 42 new restaurants during Q2.

Over the long term, Chipotle is a stock that’s likely to do well. In the intermediate term, it may be a stock to pick up on weakness.

O’Reilly Automotive (ORLY)

Source: Jonathan Weiss /

Last on this list of stocks to buy is O’Reilly Automotive (NASDAQ:ORLY). A leading specialty retailer of aftermarket automotive supplies, parts, tools and accessories, O’Reilly is everywhere in the U.S. This company has seen interest surge recently as investors consider the ramifications of a potential downturn on the auto market.

Yes, the average age of automobiles on U.S. roads is now 12.2 years, a record. Accordingly, there have been calls from bears for years that replacement sales (of new vehicles) could make auto parts dealers like O’Reilly less attractive.

However, in times of economic distress and low consumer confidence, many consumers may choose to delay a new car purchase and fix up their old beater. Should such a scenario arise, O’Reilly is well-positioned to act as a hedge against distressing times.

The company’s recent results showed 30% comparable store sales increases, demonstrating O’Reilly is continuing to nab market share. Thus, even if the economy does a 180 from here, there’s lots of upside potential for this name. As a long-term holding, ORLY stock certainly looks like a decent pick right now.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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