NEW YORK ( TheStreet) -- The markets have stabilized somewhat after Thursday afternoon's bloodbath on the Dow, but the cause behind it is still a big question mark for many people -- a trading software glitch is one suspected cause -- and resulting in some lingering uncertainties.

Amid all this, consumer staple and discretionary stocks -- including Procter & Gamble ( PG) -- continue to be keepers. P&G was one of the biggest decliners on the Dow Thursday, falling 4%, then suddenly plummeting 20%, before paring losses.

Indeed, while recommending various consumer goods stocks to invest in, Hilliard Lyons portfolio manager Brian Campbell admits, "I don't watch them everyday." Instead, he suggests a longer-term horizon for these stocks. Read on to see which consumer goods stock are stable enough to weather even the fiercest of market storms.



In Campbell's opinion, Thursday's market , which was providing irrational prices, had been an opportunity to buy well-run companies with strong brands. "I think volatility will continue," he said of the market, which has been entrenched in Euro zone debt fears, along with residual anxiety from Thursday's bloodbath on the Dow.

Case in point: discretionary stock Mattel ( MAT) had an annual dividend payout out 75 cents last year, and Campbell expects that it will get bumped up to around a dollar this year. "Mattel should have huge, record free-cash flow this year, so expect a dividend increase into the year," he said.

(For similar reasons, Campbell also notes that he likes consumer staple CVS Caremark ( CVS), declaring it a franchise with long-term earnings growth prospects and strong demographic trends.)

Combined, Campbell advises that consumer discretionary and staple stocks should comprise about 20% of an investor's portfolio.



With reference to Thursday's market mayhem, Scott Murphy, a portfolio manager at Hardesty Capital Management, said that the "easy money has probably already been made" on discretionary stocks.

Yet, "I still think there are stocks out there that are selling at multiples well below five-year averages," Murphy said, noting that while the economy may not be recovering as quickly as it did in past, post-recessionary periods, it is, indeed, recovering. Murphy believes that employment statistics will start to look better and better, and consumer confidence will increase every month.

The Labor Department's latest nonfarm payrolls report indicates that the unemployment rate unexpectedly rose to 9.9% in April, from 9.7% -- although the increase in the percentage is likely due to more people are looking for work again.

In light of all this, one of the consumer stocks Murphy likes is Harley-Davidson ( HOG). It had been re-aligning its cost-structure, and from here on in, "earnings are really going to continue to come back strongly," Murphy believes. Harley's up 19.6% year-to-date.



For retail investors who are feeling a bit fragile about the market right now, Murphy's also recommending "historically defensive names," like Procter & Gamble and PepsiCo ( PEP) -- even though the former has "really done nothing," and "underperformed this year."

The stock's 12-month change hasn't been great.

But as the economy improves, and consumers begin trading up to more expensive products, P&G could be a good beneficiary, Murphy explains.

Another potential plus for company is the installation of its new CEO, a P&G vet with a military background, Robert McDonald.

"He really seems to have a great operational background," Murphy says.



Meanwhile, Pepsi stock has been a market perform this year, but "their executive management's been pretty outspoken in terms of earnings growth," with a full-year growth target of 11 to 13%.

Also, "it's a world-class company" for its price-to-earnings ratio.

Murphy praises PepsiCo for its world's first 100% biodegradable snack bag and its appeal to a market that's growing increasingly environmentally-conscious.

"Both are more imaginative companies," Murphy says of P&G and Pepsi. "They are innovators with a lot of revenue from new products, which is a key metric we look at ... they aren't resting on their laurels."

-- Reported by Andrea Tse in New York

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