Amazon sees a significant increase in revenue and efficiency in AI.
There are two huge growth drivers in front of Dutch Brothers.
Philip Morris' growth is powered by its smoke-free combination.
10 Better Stocks We're awesome than Amazon ›
Consumer stocks have rebounded and appear to have relocated after entering bear territory earlier this year. While both moving and the potential impact of unwelcome tariffs is a risk, consumer space remains one of the best places to find attractive investments in the long term.
Let's look at three stocks that investors can buy in the long run.
Amazon (NASDAQ: AMZN) It is an excellent combination of consumer and technology inventory. It has the largest e-commerce platform in the world, and the largest cloud computing business in Amazon Web Services (AWS). It has also become one of the largest digital advertising platforms as brands and third-party merchants use their sponsored ads to promote their products on their platforms.
One of the best things about Amazon Story is that it uses artificial intelligence (AI) in its business to help drive growth and improve its efficiency. Its biggest revenue growth driver is that AWS customers use their solutions to create AI models and applications and then run AI workloads on their platforms. However, it also uses AI in its e-commerce business, making it easier for third-party merchants to create lists and target consumers by sponsoring ads.
Meanwhile, Amazon is using AI in logistics and warehousing units to help improve efficiency and reduce costs. For example, it is using AI to help plan better routes, while warehouses have AI-powered robots that can lift heavy objects, carry packages, and even identify damaged goods, prevent transportation and reduce expensive returns. This has led the company to see strong operational leverage in its e-commerce business.
Most importantly, even after the undervalued rally, Amazon remains at one of the most attractive valuations in its history.
Coffee shop operator Dutch brothers (NYSE: Brothers) Have one of the best growth stories in the consumer space. Most importantly, the company is an extended story. It operates a small location primarily served by drives, providing it with strong unit economics and fast return periods. The company has only over 1,000 stores in 18 states, so it has the opportunity to reach 2,029 locations by the end of 2029 and has a total market opportunity of 7,000 stores.
But this is not the end of the Dutch brothers’ growth story. The company also has a huge opportunity to grow its same-store sales by introducing food.
Despite steady sales growth in the company, the company has left some sales on the table, especially around breakfast time, without any powerful breakfast products. This is going to change as it has been testing the expanded food menu at several locations and plans to grow over time.
Currently, food is less than 2% sold by Dutch Brothers, while food accounts for 19% StarbucksSales last quarter. It is easy to see that this is a huge opportunity for the company to move forward. Mobile ordering is also very late, which is another reliable opportunity for coffee shop operators.
The growth inventory of the defense industry, Philip Morris Internationall (NYSE: PM) Already keeping distance from competitors in the tobacco industry. The company's advantage is that it does not sell cigarettes in the United States, which is a downward market due to health issues and the smoke epidemic. Meanwhile, international demand remains stable, and the company has solid pricing power.
However, Philip Morris's growth is provided by a smoke-free portfolio led by Zyn and Iqos.
Zyn is a flavored nicotine pouch that has soared in the U.S. popularity due to its subtlety and social media buzz.
Meanwhile, IQO is a high-heated tobacco product that has gained a share in the international market. After repurchasing its rights Otria In the United States, Philip Morris plans to launch IQOs nationwide once approved by the U.S. Food and Drug Administration.
Most importantly, Philip Morris is that the unit economics of its two best growing products are much better than traditional cigarettes. The company said Zyn's product contribution level is 6 times higher than that of cigarettes, while IQO's product contribution level is about 2 to 2.5 times higher.
Philip Morris is also quite isolated from the tariffs. It won't make or sell cigarettes in the US, so don't worry about that. Meanwhile, it makes Zyn for US customers in the United States.
Despite its strong performance this year - the stock is still trading at a reasonable valuation as of this writing, with a forward price (P/E) ratio of 24 times and a PEG (price/earnings vs growth rate) below 0.4, according to analyst estimates in 2025. Stocks with PEG ratios below 1 are generally considered undervalued.
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John Mackey, former CEO of Amazon's subsidiary Whole Foods Market, is a member of the board of directors of Motley Fool. Geoffrey Seiler holds a position at Philip Morris International. Motley fool has a place and recommends Amazon and Starbucks. Motley Fools recommends Dutch Brothers and Philip Morris International. Motley Fool has a disclosure policy.
3 Soaring Stocks, I'm buying now without hesitation, was originally published by Motley Fool