Millennials and Gen Z are emerging as the dominant consumer groups in the dynamic economy, and their purchasing behaviors are dramatically shaping the market.  As these generations demand brands that align with their values, quality stocks like Netflix, Inc. (NFLX), PepsiCo, Inc. (PEP), and Macy’s, Inc. (M) are successfully capturing their attention through targeted offerings and messaging.

The evolving trends highlight the importance of engaging with these younger consumers through digital platforms and aligning brand values with their expectations. With a focus on value, reputation, and sustainability, these companies are poised to thrive in an increasingly competitive marketplace.

A survey conducted in 2023 revealed that 77% of Gen Z consumers in the U.S. consider the value of products and services as a key factor in their purchasing decisions, with 73% also prioritizing brand reputation. Sustainability practices are another major concern, with 66% of respondents factoring this into their choices.

Considering these conducive trends, let’s examine the stocks in detail.

Netflix, Inc. (NFLX)

NFLX delivers a diverse range of entertainment products, including TV series, documentaries, feature films, and games, catering to audiences across various genres and languages.

During the fiscal third quarter that ended September 30, 2024, NFLX’s revenue increased 15% year-over-year to $9.83 million. Its operating income grew 51.8% from the year-ago value to $2.91 million. In addition, the company’s net income and EPS came in at $2.36 million and $5.40, up 41% and 44.8% over the prior-year quarter, respectively.

Analysts expect NFLX’s EPS and revenue for the fourth quarter ended December 31, 2024, to increase 100.8% and 14.8% year-over-year to $4.22 and $10.14 billion, respectively. It surpassed the Street EPS estimates in each of the trailing four quarters.

Over the past year, the stock has gained 80.6% to close the last trading session at $865.59. It soared 77.8% year-to-date.

NFLX’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

NFLX has a B grade in Sentiment and Quality. It is ranked #20 out of 52 stocks in the A-rated Internet industry.

Beyond what we have stated above, we also have given NFLX grades for Growth, Value, Momentum, and Stability. Get all the NFLX’s ratings here.

PepsiCo, Inc. (PEP)

PEP is a global leader in the production, marketing, and distribution of beverages and convenient foods. With renowned brands like Lay’s, Pepsi, Gatorade, and Quaker, it caters to a broad consumer base through grocery stores, e-commerce platforms, and food service channels across diverse regions worldwide.

On November 19, 2024, PEP’s BOD declared a quarterly dividend of $1.355 per share, a 7% increase compared to the prior year. This aligns with its annualized dividend increase to $5.42 per share, which translates to a dividend yield of 3.35% at the prevailing price levels. PEP has consistently increased its dividend payments for the past 51 years.

On October 1, 2024, PEP announced a definitive agreement to acquire Garza Food Ventures LLC, known as Siete Foods, for $1.20 billion. This strategic move aims to expand the PEP portfolio in the health-focused food segment.

In the fiscal third quarter ended September 7, 2024, PEP’s net revenues were $23.32 billion. Its core, non-GAAP operating profit was $4.18 billion, up 3.6% from the year-ago value. Moreover non-GAAP net income attributable to PepsiCo stood at $3.19 billion and $2.31 per share, respectively, representing increases of 2.6% and 2.7% over the prior-year quarter.

Street expects PEP’s revenue and EPS for the quarter ending December 31, 2024, to increase marginally and 9.4% year-over-year to $27.98 billion and $1.95, respectively.

Over the past year, the stock has declined 3.1%, to close the last trading session at $163.05.

PEP’s POWR Ratings reflect strong prospects. The stock has an overall rating of B, translating to a Buy in our proprietary rating system.

It has an A grade for Quality and a B for Growth. It is ranked #9 out of 32 stocks in the B-rated Beverages industry.

To access PEP’s Value, Momentum, Stability, and Sentiment ratings, click here.

Macy’s, Inc. (M)

M is a leading omni-channel retailer in the United States, offering apparel, accessories, cosmetics, and home furnishings through its stores, websites, and mobile apps. Operating under the M’s, Bloomingdale’s, and bluemercury brands, it also extends its presence to Dubai and Kuwait through licensing agreements.

On September 18, 2024, M announced early tender results for its subsidiary Macy’s Retail Holdings, LLC’s cash tender offer for certain notes. The offer, capped at a combined purchase price of $220 million, prioritizes the listed series of notes and excludes accrued interest, fees, and expenses.

It pays an annual dividend of $0.69, which translates to a dividend yield of 4.26% at the prevailing price levels.

M posted total revenue of $5.10 billion for the second quarter that ended on August 3, 2024. Its operating income came in at $222 million, up 79% year-over-year. Its net income adjusted to exclude certain items came in at $149 million, up 109.9% year-over-year, while its adjusted earnings per share grew 103.8% from the year-ago value to $0.53.

Street expects M’s revenue for the fiscal year (ending January 2025) to be $22.08 billion. Its EPS for the same period is expected to be $2.71.

Shares of M have gained 7% over the past year and 3.6% over the past month to close the last trading session at $15.94.

M’s bright prospects are apparent in its POWR Ratings.

It has an A grade for Value and a B for Momentum and Quality. Within the B-rated Fashion & Luxury industry, it is ranked #34 out of 60 stocks.

Click here to see M’s ratings for Growth, Stability, and Sentiment.

What To Do Next?

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NFLX shares rose $1.41 (+0.16%) in premarket trading Tuesday. Year-to-date, NFLX has gained 78.11%, versus a 27.15% rise in the benchmark S&P 500 index during the same period.

About the Author: Kritika Sarmah

Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities. More...

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