My 2 Favorite Stocks to Buy Right Now

When looking for a solid consumer goods stock to buy, I consider the company's relationship with its customers. Are they loyal to that business or brand for a particular reason? If so, that's a very positive point as it may support that company's revenue even during tough market environments -- after all, when you invest over the long term, you'll likely hold shares of this particular company during various cycles. So it's a great idea to choose players that may thrive during the good times and at least maintain a certain stability during downturns.

My two favorite stocks to buy right now fit the bill. And why should you buy them at the moment? Because they're on sale. Both of these players have seen their valuations decline over the past year. Let's take a closer look at these two top consumer stocks to add to your portfolio.

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1. Costco Wholesale

Costco Wholesale (NASDAQ: COST) has a business model that helps the company shine during any market environment. The first important point to note is that Costco generates revenue from you before you even start your shopping trip. This is thanks to the membership fee you pay to access Costco's great deals for a full year -- it's $65 for a standard membership and $130 for executive level.

This is a reasonable price for you, but it adds up quickly for Costco, driving the company's profitability. This isn't surprising since offering memberships is high margin -- they don't require much investment beyond offering customers a card.

Meanwhile, you're likely to shop as much as you can at Costco since you've paid for this membership. And during tough economic times, shoppers are very interested in taking advantage of the deals on essentials, from food to gas. So Costco is a company that can maintain its strength even at times when consumers are watching their wallets. Costco has steadily increased its revenue over the past five years, through bear and bull times.

COST Revenue (Annual) data by YCharts

Importantly, Costco has a high rate of membership retention, particularly in its major markets of the U.S. and Canada. In those countries, renewal rates steadily surpass 90% year after year. So there's reason to be confident that this membership base will continue to power Costco's earnings higher in the years to come.

Costco stock hasn't fallen to dirt cheap levels in recent years as investors recognized the company's strength and are willing to pay a premium for it. Still, valuation has declined about 10% over the past year, and the stock today trades for 47x forward earnings estimates right now. That's a reasonable price to pay for a company like Costco that's well-positioned for growth over the long term.

2. Chewy

Chewy (NYSE: CHWY), like Costco, is a retailer that customers may continue to favor regardless of the economic environment. The company is an online seller of everything your pets need -- from food and toys to treats and even healthcare items and services. Chewy has reached important milestones over the past several years, such as becoming profitable and maintaining this profitability.

Meanwhile, there's reason to be optimistic that Chewy's growth will continue, and this is thanks to its strong customer base. This group of loyal customers powers Chewy's revenue growth, and this is key because it offers us visibility on revenue to come. We can see all of this through Autoship sales figures. Autoship is a service that allows pet owners to sign up for automatic reorder and shipping of their favorite items. So this represents recurrent sales for Chewy.

Autoship sales have consistently represented at least 80% of total sales over the past several quarters, and in the latest quarter, they accounted for 84% of total sales.

Chewy also has a newish growth driver that offers it another revenue stream and may boost its e-commerce business. The company launched its own veterinary clinics in 2024. In addition to generating revenue, these clinics may also introduce Chewy's e-commerce offerings to potential new customers.

Considering all of this, today, Chewy shares look like a bargain, trading for 24x forward earnings estimates -- down from more than 36x a year ago -- that investors may want to buy like there's no tomorrow.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chewy and Costco Wholesale. The Motley Fool has a disclosure policy.