In this article, we discuss the 10 best soaps and cleaning materials stocks to buy. To skip the detailed analysis of related industries and current market conditions, go directly to the 5 Best Soaps and Cleaning Materials Stocks to Buy.
Although the US economy seems resilient with easing inflation and low unemployment rates, we still have experienced some pullback in the market recently, and experts are suggesting a 5% to 10% correction in the near future. While some of it can be attributed to the tensions in the Middle East, we still saw the Dow Jones Index close out higher at nearly 0.6% during the day on April 19 (best day of the week), which shows that the investors are blowing past the recent Iran-Israel conflict. Nevertheless, the expectations of rate cuts are fading and most investors and experts believe that the Fed could be taking a break from rate cuts for a little longer. According to CME’s FedWatch tool, 96.8% of the market expects the Fed to not cut rates at the next meeting on May 1, 2024, while 3.2% expect a rate cut of 25 basis points. While most of them believe that the Fed will make two cuts in the year, others like the president of Yardeni Research, Dr. Ed Yardeni, believe that there might be no rate cuts in the current year.
Are the Chances of Rate Cuts Fading Entirely?
Despite his predictions of no rate cuts this year, Dr. Yardeni is still bullish on the US economy. On April 18, Bloomberg reported that Dr. Yardeni sees the US economy demonstrating signs similar to those of the “Roaring 20s” and expects it to end the year with such momentum, with a 60% probability. Dr. Yardeni thinks there’s a 20% chance that the economy performs in a similar fashion to how it performed in the 1990s when it entered into a recession which lasted from July 1990 to March 1991. There’s also a 20% chance for the economy to enter into a period of stagflation, similar to what we saw in the 1970s. On the other hand, the International Monetary Fund’s Managing Director, Kristalina Georgieva believes that we could instead be in “the Tepid Twenties”, and witness sluggish growth and high debt. However, Georgieva still sees strength in the US economy and some emerging markets. She believes that the Fed is doing the right thing by not rushing the rate cuts and predicts that near the end of the year, conditions may arise in the US which could allow the Fed to start cutting rates.
Allspring Global’s Bryant VanCronkhite also believes that the current economic metrics show that the Fed could hold off on cutting rates for a little longer. In a CNBC interview on April 9, he said that while the US consumer has held up the economy significantly over the last couple of years, he sees signs that consumer spending is fading. Bryant VanCronkhite is “Overweight” on the consumer staples sector and “Underweight” on the consumer discretionary sector.
Defensive Stocks That Are Performing Well
While the consumer defensive segment performs slowly compared to its consumer cyclical counterpart, some stocks have managed to outperform the broader market. As of April 19, The Kroger Co. (NYSE:KR) has gained 22.26%. On top of that, during the current market pullback, when the S&P 500 is showing declines of 5.27% year-to-date, the company has been impacted very little and has declined by less than 1%. One of the main reasons The Kroger Co.’s (NYSE:KR) stock performed so well is because of its latest earnings. The company’s Q4 non-GAAP EPS came in at $1.34, outperforming the estimates by $0.21 and its revenues were up 6.5% year-over-year at $37.1 billion, which beat the estimates by $40 million. The company also provided healthy guidance for FY24 and sees full-year EPS of $4.30 to $4.50 in addition to seeing its revenue grow in the second quarter.
The Kroger Co.’s (NYSE:KR) chairman and CEO, Rodney McMullen, made the following comments at its latest earnings call:
“I’d like to start with Kroger’s value creation model, which supports our optimism for the future. We are guided by our vision that when people think food, they think Kroger. To achieve this vision, we are delivering a best-in-class customer experience and investing in our associates. We know that when we take care of our customers and our associates, we generate attractive and sustainable returns for our shareholders.
Kroger’s go-to-market strategy includes four focus areas: fresh, power brands, seamless, and personalization that propels a customer experience that will grow sales and build loyalty. Our team of associates power Kroger’s success by executing this strategy and delivering an outstanding customer experience. To attract, develop, and retain our talented teams, we make holistic investments in our associates. Our value creation model enables us to balance investments in our customers’ experience and associates while generating sustainable returns for our shareholders.”
Another consumer staples stock outperforming the market is Target Corporation (NYSE:TGT). The company experienced increased profitability in the fourth quarter and reported an EPS of $2.98, up 57.67% year-over-year and exceeding the $2.42 forecast. The company’s revenue of $31.47 billion missed the estimates by $400 million but its gross margins increased significantly to 25.6% from last year’s 22.7%. The CEO of Target Corporation (NYSE:TGT), Brian Cornell, made the following comments regarding the company’s plans at its Q4, 2023 earnings call:
“Over the next decade, we expect to open more than 300 new, mostly full-size stores, adding billions of dollars in incremental growth. We’ll continue to remodel stores with plans to invest in the vast majority of our nearly 2,000 stores in the next 10 years. We’ll also continue to invest in our supply chain and technology. In less than 10 years, we’ve created, acquired, and constantly advanced sortation centers, upstream distribution centers, food distribution centers, and a steady stream of replenishment, technology, and logistics innovation.
At least 10 additional supply chain facilities are in the pipeline and will be operating within the next decade. Underpinning all of this is our long standing and ongoing investment in technology. This includes a leading team of engineers, data scientists, and product managers focused on further integrating AI and machine learning and driving early adoption of generative AI, all geared towards making it easier for our team to best serve our guests across both the digital and physical assets. Take same day fulfillment. Our initial investments gave us an early lead in same day. Today, same day is much more competitive. But continued innovation and better integration with our Target ecosystem means we’re ready to expand same day delivery for our guests while also building on our next day capabilities.”
To check out other such stocks, go to 12 Best Counter Cyclical Stocks to Invest in.
Soaps and Cleaning Materials Stocks: A Defensive Play
In the current market conditions, when the market is experiencing corrections and analysts and experts are lowering their expectations of rate cuts, soap and cleaning materials stocks provide a cushion to fall back on till it all blows over. Soaps and cleaning materials are necessary goods mostly provided by consumer staples companies that are often resilient during a market downturn. For example, when the S&P 500 declined by 18.1% in 2022, the Consumer Staples Select Sector SPDR Fund (XLP) showed a decline of slightly over 3%.
The soap and cleaning materials industry is expected to have a slow but steady growth over the next few years. According to The Business Research Company, the industry was valued at $190.89 billion in 2023 and will reach $290.33 billion by 2028, registering a CAGR of over 8.7% during the forecasted period. Some of the best soaps and cleaning materials stocks include Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), and Colgate-Palmolive Company (NYSE:CL).
10 Best Soaps and Cleaning Materials Stocks to Buy
Our Methodology
For this article, we used the Yahoo Finance stock screener to find 14 convenience goods companies that offer soaps and cleaning materials. We narrowed down our list to 10 stocks that were most widely held by institutional investors. The stocks are listed in ascending order of their hedge fund sentiment.
The hedge fund data was taken from Insider Monkey’s database of 933 elite hedge funds. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
10 Best Soaps and Cleaning Materials Stocks to Buy
10. Unilever PLC (NYSE:UL)
Number of Hedge Fund Holders: 25
Unilever PLC (NYSE:UL) provides fast-moving consumer goods, including soaps, household cleaning products, and more, through different brands, including Cif, Sunlight, Domestos, Dove, and Lifebuoy, among others.
On March 19, Unilever PLC (NYSE:UL) announced its plan to spin off its ice cream business in accordance with its Growth Action Plan (GAP). In the announcement, the company mentioned that its ice cream division recorded sales of €7.9 billion in 2023. The company plans on simplifying its portfolio through the demerger and creating a standalone entity.
In the fourth quarter of 2023, Unilever PLC (NYSE:UL) was part of 25 hedge funds’ portfolios with a total stake value of $750.912 million. Fisher Asset Management is the largest shareholder in the company and has a position worth nearly $525.05 million as of Q4, 2023.
Unilever PLC (NYSE:UL) joins Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), and Colgate-Palmolive Company (NYSE:CL) in our list of the best soaps and cleaning materials stocks to buy.
9. Church & Dwight Co., Inc. (NYSE:CHD)
Number of Hedge Fund Holders: 30
Church & Dwight Co., Inc. (NYSE:CHD) is engaged in the development, manufacturing, and marketing of household and personal care products, among others. The company offers laundry detergents, stain removers, cleaning solutions, and more under various brands, including ARM & HAMMER, OXICLEAN, XTRA, and more.
On April 10, Wells Fargo analyst Christopher Carey maintained a Buy rating on Church & Dwight Co., Inc. (NYSE:CHD) with a price target of $112.00. Church & Dwight Co., Inc. (NYSE:CHD) is up by 10.34% year-to-date on April 19.
In Q4 of 2023, 30 hedge funds held positions in Church & Dwight Co., Inc. (NYSE:CHD), and their total stakes amounted to $1.058 billion. Terry Smith’s Fundsmith LLP is the most prominent shareholder in the company as of the fourth quarter of 2023 with a position worth $686.89 million.
8. Newell Brands Inc. (NASDAQ:NWL)
Number of Hedge Fund Holders: 33
Newell Brands Inc. (NASDAQ:NWL) manufactures, designs, sources, and distributes consumer and commercial products. Newell Brands Inc. (NASDAQ:NWL) provides commercial cleaning and maintenance solution products under its Commercial Solutions segment. Its Rubbermaid Commercial Products segment is known for making hand soaps. Newell Brands Inc. (NASDAQ:NWL) is also offering a forward dividend yield of 4%, as of April 19 and has a trailing 12-month free cash flow of $646 million.
According to Insider Monkey’s database that tracks 933 elite hedge funds, 33 hedge funds held positions in Newell Brands Inc. (NASDAQ:NWL) in the fourth quarter of 2023, with positions worth $683.117 million. With nearly 54.1 million shares of the company, valued at $469.56 million, Pzena Investment Management is the largest shareholder of Newell Brands Inc. (NASDAQ:NWL), as of December 31, 2023.
7. Kimberly-Clark Corporation (NYSE:KMB)
Number of Hedge Fund Holders: 36
Kimberly-Clark Corporation (NYSE:KMB) is engaged in the manufacturing and marketing of personal care and consumer tissue products. Kimberly-Clark Corporation (NYSE:KMB) sells soaps, paper towels, and bathroom tissues, among other products, through its Personal Care, Consumer Tissue, and K-C Professional segments.
On March 28, Piper Sandler analyst Korinne Wolfmeyer raised the price target on Kimberly-Clark Corporation (NYSE:KMB) to $152 from $145 while maintaining an Overweight rating on the stock. The analyst sees the company as an attractive investment in light of its investor day that was hosted on March 27, where a new operating model and cost-saving plan, along with ambitious growth targets, were revealed by the company. Wolfmeyer is confident in Kimberly-Clark Corporation’s (NYSE:KMB) ability to achieve its outlook of more than 3% revenue growth along with generating double-digit annual returns for its investors.
Kimberly-Clark Corporation (NYSE:KMB) is seventh on our list of soaps and cleaning materials stocks to buy. Hedge fund sentiment was positive toward the stock in the fourth quarter of 2023. In the quarter, 36 hedge funds had stakes in Kimberly-Clark Corporation (NYSE:KMB), with total positions worth $1.048 billion. This is compared to 31 funds with positions worth $790.437 million in the preceding quarter. As of December 31, 2023, Israel Englander’s Millennium Management is the most dominant shareholder in the company. In the quarter, the firm increased its stake by 46% to 1.106 million shares worth $134.388 million.
6. The Clorox Company (NYSE:CLX)
Number of Hedge Fund Holders: 39
The Clorox Company (NYSE:CLX) is a manufacturer and marketeer of consumer and professional products. The company offers its products through four segments, including Health and Wellness, Household, Lifestyle, and International. The Clorox Company (NYSE:CLX) offers laundry additives, professional cleaning and disinfecting products, and more under various brands, including CloroxPro and Clorox Healthcare, among others, and takes the sixth spot on our list of best soaps and cleaning materials stocks to buy.
In the fourth quarter of 2023, hedge fund sentiment was positive toward The Clorox Company (NYSE:CLX) as 39 hedge funds held positions in the company and their stakes amounted to $1.53 billion. This is compared to 34 funds in the third quarter, with positions worth $534.301 million. As of December 31, 2023, Holocene Advisors is the top investor in the company and has a position worth $242.417 million.
The Clorox Company (NYSE:CLX) is a dividend stocks that has consecutively increased its dividend for the past 46 years. As of April 19, the company has a dividend yield of 3.34% and its next quarterly dividend of $1.2 is payable by May 10 to the shareholders of record on April 24.
Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), and Colgate-Palmolive Company (NYSE:CL) are some of the best soaps and cleaning materials stocks to buy, in addition to The Clorox Company (NYSE:CLX).
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Disclosure. None. 10 Best Soaps and Cleaning Materials Stocks to Buy is originally published on Insider Monkey.