In this article, we discuss 5 best buy-the-dip consumer stocks to consider. If you want to see more stocks in this list, check out 10 Best Buy-The-Dip Consumer Stocks to Consider.
5. The Estée Lauder Companies Inc. (NYSE:EL)
Number of Hedge Fund Holders: 46
YTD Share Price Decline as of July 1: 30.72%
The Estée Lauder Companies Inc. (NYSE:EL) manufactures and markets skincare, makeup, fragrance, and hair care products worldwide. The company offers its products under the Estée Lauder, Clinique, M·A·C, Bobbi Brown, La Mer, Jo Malone London, Smashbox, GLAMGLOW, BECCA, Too Faced, Dr. Jart+, and The Ordinary brands. As of July 1, shares of The Estée Lauder Companies Inc. (NYSE:EL) have declined about 31% year to date.
On May 31, after China’s COVID-19 situation improved and restrictions were loosened in Shanghai and Beijing, Oppenheimer analyst Rupesh Parikh reinstated The Estée Lauder Companies Inc. (NYSE:EL) as his top pick. As he looks ahead to fiscal 2023, the analyst believes pricing benefits and a China and travel recovery could lead to approximately 10% constant currency sales growth. Moreover, the analyst thinks the August earnings could drive positive catalysts for shares. He maintained an Outperform rating and a $300 price target on the stock.
According to Insider Monkey’s Q1 data, 46 hedge funds were bullish on The Estée Lauder Companies Inc. (NYSE:EL), with combined stakes worth over $3 billion. Terry Smith’s Fundsmith LLP is the leading position holder in the company, with roughly 5.8 million shares valued at $1.5 billion.
Here is what Harding Loevner Global Equity Fund has to say about The Estée Lauder Companies Inc. (NYSE:EL) in its Q3 2021 investor letter:
“We sold cosmetic producer Estée Lauder, which we bought last March. At the time, the market reflected a dire outlook for retail demand, especially tourist-related; however, we found its Chinese business attractive and admired its agility across social media and other digital channels. As the stock has appreciated, the resulting valuation now leaves no room for error, such as a potential shift of Chinese consumers’ tastes away from US brands.”
4. Target Corporation (NYSE:TGT)
Number of Hedge Fund Holders: 50
YTD Share Price Decline as of July 1: 38.62%
Target Corporation (NYSE:TGT) is one of the leading American retailers. 2022 marks the 51st consecutive year in which Target Corporation (NYSE:TGT) has raised its annual dividend. The shares have dropped about 39% year to date, which makes Target Corporation (NYSE:TGT) an attractive stock for dividend hunters. On June 10, Credit Suisse analyst Robert Moskow maintained an Outperform rating and a $180 price target on Target Corporation (NYSE:TGT), but lowered his FY22 EPS estimates to $8.59 from $13.56 after the company slashed its FY22 profit expectations.
Among the hedge funds tracked by Insider Monkey, 50 funds reported owning stakes in Target Corporation (NYSE:TGT) at the end of the first quarter of 2022, up from 49 funds in the preceding quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is the leading shareholder of the company, with 2.50 million shares worth $530.5 million.
Here is what Nelson Capital Management has to say about Target Corporation (NYSE:TGT) in its Q2 2021 investor letter:
“We added Target (tkr: TGT) to our consumer staples sector. Target Corporation (NYSE:TGT) offers a broad array of products in owned and known brand items at affordable prices. Its omni-channel fulfillment centers allow customers to receive their items via in-store pickup, curbside pickup, same-day shipping and regular shipping while simultaneously reducing operating costs. With a significantly lower valuation than peers and a unique operating strategy, Target is an attractive holding.”
3. Bath & Body Works, Inc. (NYSE:BBWI)
Number of Hedge Fund Holders: 57
YTD Share Price Decline as of July 1: 59.95%
Bath & Body Works, Inc. (NYSE:BBWI) was founded in 1963 and is headquartered in Columbus, Ohio. The company markets and sells home fragrance, body care, soaps, and sanitizer products. The stock has dropped about 60% year to date as of July 1. Although the shares have crashed, the company enjoys solid customer loyalty and brand recognition.
On June 30, Piper Sandler analyst Korinne Wolfmeyer initiated coverage of Bath & Body Works, Inc. (NYSE:BBWI) with an Overweight rating and a $58 price target. The analyst observed that Bath & Body Works, Inc. (NYSE:BBWI) has a “repeat business model” in a category that proved to be robust during and after the pandemic. The analyst likes the “stickiness” within the home and bath segment, which accounts for more than 50% of Bath & Body Works, Inc. (NYSE:BBWI)’s sales. The company also wants to expand into hair and skin care this fall, two core categories within beauty that are seeing strong demand, added the analyst.
In the first quarter of 2022, 57 hedge funds reported long positions in Bath & Body Works, Inc. (NYSE:BBWI), compared to 62 funds in the last quarter.
2. RH (NYSE:RH)
Number of Hedge Fund Holders: 63
YTD Share Price Decline as of July 1: 59%
RH (NYSE:RH) operates as a California-based home furnishings retailer. As of July 1, the stock has declined 59% year to date. Citi analyst Steven Zaccone pointed towards key investor concerns after RH (NYSE:RH)’s second guidance cut in a month. The analyst cited short-term concerns, but believes “a lot of damage is already priced in”. The stock now trades at nine-times his slashed fiscal 2023 earnings estimates, which he views “as the most extreme bear case”. According to the analyst, RH (NYSE:RH)’s risk/reward “skews to significantly more upside than downside at current valuation” and he kept a Buy rating on the stock with a $338 price target on July 1.
Among the hedge funds tracked by Insider Monkey, 63 funds disclosed long positions in RH (NYSE:RH) at the end of Q1 2022, up from 58 funds in the earlier quarter. Warren Buffett’s Berkshire Hathaway is the leading stakeholder of the company, with 2.17 million shares worth $707.6 million.
Here is what Polen US SMID Company Growth Fund has to say about RH (NYSE:RH) in its Q1 2022 investor letter:
“RH is a furniture store company with brand recognition and a unique business model. The company’s stock price fell sharply over the first three months of 2022 despite solid operating results, which resulted in what we believed to be an attractive opportunity to add to our position in the company. We are mindful that, on the margin, the company is certainly experiencing some early impact from record inflation and rising interest rates, and we feel comfortable in both the management team’s ability to navigate these challenges and the power of the company’s brand and its long-term potential.”
1. Caesars Entertainment, Inc. (NASDAQ:CZR)
Number of Hedge Fund Holders: 73
YTD Share Price Decline as of July 1: 58.78%
Caesars Entertainment, Inc. (NASDAQ:CZR) is based in Reno, Nevada, operating as a gaming and hospitality company in the United States. The stock has suffered a year to date decline of about 59%. On June 28, B. Riley analyst David Bain maintained a Buy recommendation on Caesars Entertainment, Inc. (NASDAQ:CZR) but lowered the price target on the shares to $128 from $149. The analyst slashed gaming stock price targets to “better encapsulate macro risks/market conditions”. However, the resultant valuations “still leave significant share price upside”, the analyst told investors. Amid past economic softness, many gaming stocks were oversold, added the analyst.
According to Insider Monkey’s Q1 data, 73 hedge funds were bullish on Caesars Entertainment, Inc. (NASDAQ:CZR), up from 72 funds in the earlier quarter.
Here is what Carillon Eagle Mid Cap Growth Fund has to say about Caesars Entertainment, Inc. (NASDAQ:CZR) in its Q4 2021 investor letter:
“Caesars Entertainment, a diversified casino-entertainment and resort company, underperformed in the period as its quarterly earnings update was viewed as disappointing by investors. The firm highlighted a number of one-time headwinds that ultimately weighed on margins, as well as some negative impacts brought on by the surge in COVID cases. Despite this, we believe that the sizable overall margin improvements Caesars has realized coming out of the pandemic will ultimately prove sustainable in the long run.”
You can also take a look at 10 Mid-Cap Stocks Hedge Funds Are Talking About and 10 Best Roth IRA Stocks To Buy in 2022.
