2 companies you should buy right now: Coca-Cola Amatil Ltd and JB Hi-Fi Limited

These 2 stocks have excellent future prospects: Coca-Cola Amatil Ltd (ASX:CCL) and JB Hi-Fi Limited (ASX:JBH).

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For many investors, consumer stocks lack appeal right now. That's because the Aussie economy is enduring a challenging period and, with unemployment being higher than desirable and the outlook for consumer spending being weak, consumer stocks could see their top and bottom lines come under pressure.

Of course, that viewpoint is understandable, but may not be applicable to all consumer companies. That's because there are a number of consumer stocks which offer strong growth prospects, wide margins of safety and sound strategies through which to post upbeat share price gains over the medium term.

One such company is Coca-Cola Amatil Ltd (ASX: CCL). It has endured a tough number of years, but has a refreshed strategy which looks set to boost its earnings in future years. For example, it has invested US$500m in Indonesia, where it believes a far higher growth rate can be accessed than in the domestic economy. Furthermore, Coca-Cola Amatil has also introduced new products, such as Coca-Cola Life, which have the potential to resonate well with consumers who are becoming increasingly health conscious. And, with Coca-Cola Amatil restructuring its business and generating efficiencies, it is in the process of becoming leaner and far more profitable.

In fact, Coca-Cola Amatil is forecast to increase its earnings by 6.3% next year and, with the company trading on a price to sales (P/S) ratio of 1.4, which is the same as that of the ASX, there could be scope for an upward rerating given its turnaround potential and access to higher-growth markets. Furthermore, with a yield of 4.6%, it remains a strong income play, too, at a time when interest rates are likely to continue their downward spiral.

Similarly, JB Hi-Fi Limited (ASX: JBH) is making important changes to its business model as it seeks to adapt to changing customer tastes. For example, it is focusing on its home and small appliances offerings, with existing stores being refreshed as it seeks to optimise its store layouts to appeal to more price conscious consumers.

JB Hi-Fi also rebranded its educational and commercial solutions offering as JB Hi-Fi Solutions, with its plan being to provide an integrated offer of both products and services to business, government and education clients. Its Solutions business remains on-track to meet its aspirational sales target of $500m per annum, which it intends to reach through a mix of organic growth and acquisitions.

With JB Hi-Fi trading on a price to earnings (P/E) ratio of 13.2 versus 15.9 for the wider index and 15.3 for the retailing sector, it offers a sufficiently wide margin of safety to merit investment at the present time. Certainly, the Aussie economy may endure a challenging period but, with the changes being made to its business model as well earnings growth forecasts of 5%+ per annum during the next two years, it appears to be a strong buy at the present time.

Motley Fool contributor Peter Stephens has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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