Peter Lynch Made a Fortune by Investing in Familiar Brands. Here Are 2 Consumer Stocks I Think He'd Love Right Now.

Peter Lynch built an impressive track record as the fund manager for Fidelity's Magellan Fund. Under his stewardship, from 1977 to 1990, the fund beat the S&P 500 index in 11 out of the 13 years. And it produced an impressive 29% average annual return.

Fortunately, Lynch shares his wisdom in a book called One Up on Wall Street. He describes his philosophy, which is buy what you know, research the company's fundamentals, and plan to make a long-term commitment.

With this in mind, here are two consumer goods companies that fit the bill.

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1. Costco

Many people continue to shop at Costco Wholesale's (NASDAQ: COST) giant warehouses. If you've ever gone into one, you can usually see a crowd.

What makes Costco so special? After all, members pay an annual fee for the privilege. It offers a wide range of high-quality goods and services at low unit prices. It can do that by often offering items in bulk sizes.

Digging deeper into the numbers, membership retention and growth bear out Costco's continued appeal. Global renewal rates were about 90% in the fiscal third quarter (ended May 10), in line with historical retention rates. Meanwhile, paid members increased from 82.1 million to 82.9 million over the quarter.

Costco's same-store sales (comps) continue to grow, with a sharp 6.6% increase last quarter, after excluding foreign-currency translation effects and gasoline sales. This helped drive diluted earnings per share 15.2% higher versus a year ago, to $4.93.

The company also still has a growth opportunity. It has been expanding, opening more than 20 warehouses annually. During the first three quarters of this year, management expanded by 16 locations and announced it would open another 13 in the last three months of the year.

2. TJX Companies

TJX Companies' (NYSE: TJX) retail store banners include TJ Maxx, Marshalls, and HomeSense. It sells merchandise like apparel, accessories, and furniture at steep discounts (20% to 60%) compared to other retailers.

It can do this because it buys merchandise that manufacturers need to sell for various reasons. These include faltering demand, canceled orders from other retailers, and out-of-season items.

Management buys opportunistically, and shoppers "treasure hunt," or seek items at attractive prices. This appeals to people, but particularly during tough economic times, when consumers can buy more goods at attractive prices.

TJX Companies' brands have continued to post impressive comps. Fiscal second-quarter comps gained 4% and were higher across all of its divisions. Diluted earnings per share grew 23.6% year over year to $1.36. The period ended on Aug. 1.

Management continues to see room for expansion. It opened 129 new stores last year and 71 during the first half of this year. TJX had 5,285 stores as of Aug. 1.

Lawrence Rothman, CFA has positions in Costco Wholesale. The Motley Fool has positions in and recommends Costco Wholesale and TJX Companies. The Motley Fool has a disclosure policy.