Key Points
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After a long stretch of subpar performance, retailer Target may finally be back in its element, boosted by an economic recovery nobody seems to be seeing or sensing.
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For the past three years, beverage giant PepsiCo has struggled to keep pace with competitor Coca-Cola. That’s about to change.
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Investors are worried that Google parent Alphabet will run into a serious headwind, but they’ve priced in far too much pessimism.
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If there’s anything the stock market has reminded investors over the past several days, it’s that short-term volatility can rear its head at any time, leading to unpredictable outcomes. Predicting or responding to any of these developments is folly. This truly is a long-term game, won by the people who can look past such noise and remain focused on the bigger picture.
With that as the backdrop, here’s a closer look at three value stocks to step into right now and just forget about at least for the next five years. The underlying quality of these companies will drive gains during this time frame. You just need a willingness to ignore all the unexpected swings in the meantime.
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Target
There’s no denying Walmart has outperformed rival retailer Target (NYSE: TGT) since the wind-down of the COVID-19 pandemic; the “cheap chic” schtick just doesn’t work when consumers are feeling pinched by inflation. That’s why — and how — same-store sales growth was actually negative in 2023 and 2025, and flat in 2024.
There’s a light at the end of the tunnel, though. Following same-store sales growth of 5.6% in Q1 of this year, same-store sales growth came in at 2.7% in Q2. While a couple of decent quarters don’t make a trend, all trends start out with those first few small steps.
Give at least some credit to new CEO Michael Fiddelke, who took over in August 2025. Although Target was arguably already ripe for a turnaround, he appears to have a handle on what’s wrong, and how to fix it. Better results began materializing almost immediately after he took the helm.
There’s also the possibility that discretionary consumerism is just cyclically improving despite the headlines that imply otherwise. Although inflation remains high, it’s being partially matched by wage growth. And as a reminder, the United States saw job growth of 165,000 positions in October, versus expectations of only 65,000 new roles. The Department of Labor also revised its August and September payroll growth numbers upward by 84,000 roles for the two-month stretch. Money is clearly making it into consumers’ hands.
Up nearly 80% from a multiyear low made in October of last year, Target’s stock is already starting to show signs that this turnaround is taking hold. Still down 40% from its 2021 peak and priced at only 16 times next year’s conservative per-share earnings estimate of $9.55, though, there’s room for more upside. You’re also starting out with a solid dividend yield of 3%.
PepsiCo
Most investors looking for exposure to the beverage industry would probably select Coca-Cola due to its bigger size and stronger brand awareness. And if you bought into it today, you’d be fine.
If you’re looking for the better five-year purchase right now, however, PepsiCo (NASDAQ: PEP) is arguably your better option.
Yes, it’s dramatically underperformed Coca-Cola’s stock of late. While KO shares are up nearly 70% over the past three years, PEP is down nearly 30% from its 2023 peak. Blame inflation, mostly. PepsiCo’s in-house production of its beverages and snacks leaves it more vulnerable to the impact of inflation.
There’s hope on the horizon, though. Last quarter’s organic revenue growth of 3.1% brings its year-to-date growth pace to 2.7%. The company is calling for similar growth in the fourth quarter as well, accelerating last year’s tepid top-line growth of only 1.7%.
Seemingly back on track — with hope that the inflation that’s been such a problem since 2023 will start cyclically abating sooner rather than later — the next five years could be fantastic ones for PepsiCo while it reproves itself. And, valued at only 16 times next year’s expected earnings, pricing will hardly be a problem that gets in the way of gains. You’re going to be pretty well rewarded for remaining patient in the meantime too. PepsiCo’s forward-looking dividend yield currently stands at 4.2%.
Alphabet
Finally, add Google parent Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) to your list of value stocks to buy and hold until 2031.
It’s admittedly strange to categorize this technology giant as a value name. But right now, that’s what it is. Thanks to the stock’s subpar performance since May of this year, Alphabet shares are now priced dirt cheap at only 15 times their trailing earnings, and less than 20 times next year’s expected per-share profits.
There’s little doubt as to the dynamic at work here. Investors are pricing in a dramatic slowdown in the company’s growth, particularly in cloud computing, with its artificial intelligence results reflected. Investors may also be concerned that its breadwinning search-advertising business could be pressured by the advent of AI-powered chatbots like ChatGPT and Google’s Gemini. And it’s not an unreasonable concern.
It’s not exactly a reasonable one either, however, given a five-year time frame.
While the artificial intelligence industry will almost certainly be mature by 2031, it’s not going away. It will likely be bigger by then, even if its growth pace slows in the meantime (and it probably will). And as for the threat that artificial intelligence chatbots pose to the company’s search business, Google figured out how to penetrate the then-established industry to become the world’s most-visited search engine.
It can figure out how to monetize and win within the AI chatbot business too, if only by leveraging its existing deep reach into the entirety of the web. To this end, Google’s Gemini reached 1 billion monthly users in the middle of this year, making it the company’s fastest-growing product ever. Its share of the worldwide AI chatbot market also soared from 11% to 29% in October, according to Statcounter, dragging ChatGPT’s share down from more than 80% to only 51%. Clearly, the company’s doing something right on this front.
Perhaps the most underappreciated aspect of this stock’s valuation right now, though, is that not only are investors pricing in a slowdown, but analysts are forecasting per-share profits will actually fall from $19.71 this year to $14.95 next year. Headwinds or not, that degree of contraction just isn’t plausible.
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James Brumley has positions in Alphabet and Coca-Cola. The Motley Fool has positions in and recommends Alphabet, Target, and Walmart. The Motley Fool has a disclosure policy.
