Recession, interest rates, employment, and the housing market – American consumers are weighing the futures of all these topics. Apprehension has led to a fallback in spending. A June survey released by CNBC and Morning Consult found that 92% of Americans are pulling back their spending due to inflation and growing concerns about an economic downturn. The survey confirmed what retailers have been saying for months on earnings calls with analysts and media.

Consumers are exercising caution when spending money on discretionary items. This has led to a downturn in many consumer stocks. While the S&P 500 index has risen 15% year to date, several consumer stocks are in the red. This has created an opportunity for investors to buy shares of leading retailers and household brands at discounted prices. Here are the seven most undervalued consumer stocks to buy now.

Target (TGT)

Let’s begin with Target (NYSE:TGT), the department store chain that is one of the largest retailers in the U.S. Today, Target has nearly 2,000 stores, 440,000 employees, and generates more than $100 billion in annual revenues. The company continues to expand its physical store locations while also increasing its online sales. While Target thrived during the pandemic, it has been tough sledding for the company and its shareholders more recently. TGT stock is down 12% this year even as the S&P 500 index has climbed 15% higher.

TGT stock has been under pressure after the company reported mixed earnings and provided cautious forward guidance, saying it is seeing cautious consumers amid a slowing economy and a drop in spending on discretionary items. The company’s online sales fell 3.4% in Q1 from a year earlier. Target has also experienced a consumer backlash over its support of Pride month and the LGBTQ+ community. Regardless, TGT stock is trading at an attractive price-earnings (P/E) ratio of 22 and offers a strong dividend that yields 3.30%.

Williams-Sonoma (WSM)

Home furnishing and kitchenware retailer Williams-Sonoma (NYSE:WSM) is another undervalued consumer stock worth buying now. Over the last 12 months, WSM stock has risen only 6%, currently trading at a rock bottom P/E ratio of 8, and is offering shareholders an attractive quarterly dividend that yields 2.87% or 90 cents a share. The dividend was just increased by 15%. Best of all, Williams-Sonoma has proven to be a long-term winner, with its share price rising 105% over the last five years.

The lukewarm performance of WSM stock can be attributed to a weakening economy and slowdown in consumer spending. Management at the company have forecast flat earnings for this year as a result, news that hasn’t sat well with investors or analysts. However, the company’s profit margins remain near an all-time high of 17%. Brighter days are ahead once we emerge on the other side of a recession that is forecast for late this year or early 2024. Given its long-term performance, WSM stock is worth considering.

Tootsie Roll Industries (TR)

Candy maker Tootsie Roll Industries (NYSE:TR) has been in business since 1896, and the company still basically does one thing: makes Tootsie Rolls and Tootsie Pops. It’s a shockingly simple business model that has sustained the company for more than a century. Tootsie Roll Industries has added a few other candies to its portfolio, such as Junior Mints and DOTS, but not many. Its bread-and-butter remains the enduringly popular Tootsie Roll. Today, this Americana, chewy, chocolaty candy company has annual sales in excess of $500 million and 2,000 employees.

TR stock is currently on sale, having declined 16% this year and trading near a 52-week low. The share price is up 33% through five years and has doubled over the past decade. Other reasons to be sweet on the stock (pun intended) are a reasonable P/E ratio of 32 and a decent dividend payment of 9 cents a share each quarter, for a yield of 1.02%. The company’s sales and stock tend to spike around Halloween each year, so interested investors may want to take a position now before we move into the autumn.

Signet Jewelers (SIG)

Signet Jewelers (NYSE:SIG) doesn’t get as much attention as it ought to considering that it is the largest retailer of diamond jewelry in the world. However, SIG stock landed on the investors’ radars recently when it was revealed that investor Michael Burry of “The Big Short” fame has taken a sizable position in the company. Burry went from no position in Signet Jewelers to making the stock 9% of his $100 million portfolio, his fifth largest holding.

Burry, a self-proclaimed value investor, clearly feels that Signet Jewelers is undervalued. SIG stock certainly looks cheap right now. The share price is down 4% year to date and trading at a P/E ratio of 7. Like the other securities on this list, it provides shareholders with a quarterly dividend that yields 1.45% or 23 cents a share. If there’s a caution here it is that the long-term performance of SIG stock isn’t great, up only 14% over five years. But Burry is the man who bought GameStop (NYSE:GME) at $7 a share before it skyrocketed to more than $300.

Kroger (KR)

Another stock that looks undervalued is grocery retailer Kroger (NYSE:KR). Down 3% over the last 12 months and also near a 52-week low, KR stock could use a boost. Its P/E ratio is a modest 13, and it pays a strong dividend that yields 2.48% or 29 cents a share each quarter. The shares are currently trading 25% below the all-time high they reached in April 2022. If there’s a good time for investors to take a position in this consumer stock, now would be it. In business for 140 years, Kroger has annual grocery sales of $138 billion and 465,000 employees.

KR stock has been underperforming because of concerns over the company’s $24.6 billion acquisition of rival Albertsons (NYSE:ACI), which was announced last fall. The deal is still working its way through regulatory approvals and the Federal Trade Commission (FTC) appears to be taking its time. Additionally, several industry groups, including the United Food & Commercial Workers union (UFCW) and independent grocers are opposing the deal. While this has created some uncertainty, the deal is likely to be approved with Kroger emerging stronger as a result.

Campbell Soup (CPB)

Speaking of groceries, how about Campbell Soup (NYSE:CPB)? As with Tootsie Roll Industries, Campbell Soup does one thing exceptionally well. They make soup. Another old company that has been around for more than 150 years, Campbell Soup has branched out into other products, although not many. Today the company also sells Pepperidge Farm cookies, Goldfish crackers, and V8 vegetable juice. However, the bulk of the company’s $8.69 billion annual revenue still comes from its soups.

As an investment, CPB stock looks undervalued. Its share price is down 19% on the year and up only 12 % after five years. The stocks P/E ratio of 17 is below average among S&P 500 listed companies. It also pays a dividend that yields 3.27% or a quarterly payment of 37 cents a share. CPB stock has been brought low by declining sales after it raised prices in the current inflationary environment. However, strong brand loyalty and resilient consumers should help Campbell Soup prosper going forward.

Lowe’s (LOW)

The other home improvement big box retailer, Lowe’s (NYSE:LOW) stock looks interesting at its current valuation. LOW stock is up 11% year to date, trailing gains in the broader market. The P/E ratio of 21 is reasonable and justifiable. And shareholders benefit from a dividend that yields 1.98% or $1.10 a share each quarter. Although Lowe’s stock hasn’t been lighting the world on fire lately, it has proven to be a long-term winner, having gained 133% over the last five years and 455% in the past 10 years.

Retailers that specialize in home improvement projects tend to be viewed as discretionary by consumers. As a result, their sales typically suffer during difficult economic times. A slumping real estate market across the U.S. due to higher interest rates and a decline in lumber prices also haven’t helped Lowe’s. A rebound in housing, coupled with declining interest rates and a resumption of growth in consumer spending, should help drive LOW stock to new heights in the not-too-distant future.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.