In this article, we will look at the 10 Best Soaps and Cleaning Materials Stocks to Invest In.
Overview of the Consumer Staple Sector
Soaps and cleaning materials stocks fall in the consumer staple sector. According to the Global Industry Classification Standard (GICS), these stocks are less sensitive to economic cycles, as all consumers need to eat, clean themselves and their houses, and perform other acts of personal hygiene. Consumer staples are thus an integral part of life.
These stocks generally do not have the highest year-over-year revenue and earnings growth. This is primarily because they are usually mature and large companies. However, the consumer staples sector has historically experienced relatively minute disruption. Stocks in this sector have various other characteristics that overshadow their modest growth. These characteristics include noncyclic and inelastic demand that does not fluctuate with changing prices and economic conditions. They also entail stable revenue streams, reliable profits, low price volatility, defensive positioning, and a reliable dividend-paying nature.
What Does 2025 Look Like for Consumer Staples?
On December 10, Ben Shuleva, Fidelity Sector Portfolio Manager, published a report on Fidelity Investments to discuss the outlook and expected nature of consumer staples in 2025. The consumer staples sector had a positive year in 2024. Shuleva is of the view that with sector dynamics returning to normal, 2025 is also expected to have a positive outlook for the sector. Solid consumer balance sheets, a strong economy, and support from the Fed may help the sector perform better than the broader market. Opportunities thus exist in consumer staples in 2025. Stable consumer demand, steady real wage growth, and healthy employment are further expected to support these opportunities.
However, Shuleva warned that some uncertainties may affect the sector. These include trade policy changes that may arise due to Trump’s incoming presidential administration, the effects of tariffs, and the potential consequences of the dollar’s strength or weakness. He further highlighted that since most consumer staple products are manufactured in the United States, the direct effects of tariffs are expected to be limited. However, products like Mexican alcohol and Chinese items sold by consumer staples retailers may experience price increases.
Shuleva also presented a bright side to the sector, reasoning that since consumer staple businesses have experienced volatility from changing tariff policies in recent years, they are likely to be well-prepared for them. Like other sectors, the consumer staples sector’s ultimate performance depends upon the broader economy’s performance. It is a defensive sector, and defensive sectors are historically likely to perform well in economic weaknesses.
With these trends in view, let’s look at the 10 best soap and cleaning materials stocks to invest in.
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Our Methodology
We sifted through stock screeners, online rankings, and ETFs to compile a list of 15 soaps and cleaning materials stocks. We then selected the top 10 stocks most popular among elite hedge funds. We sourced hedge fund data from Insider Monkey’s database. The stocks are sorted in ascending order of the number of hedge fund holders that have stakes in them as of fiscal Q3 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Soaps and Cleaning Materials Stocks to Invest In
10. WD-40 Company (NASDAQ:WDFC)
Number of Hedge Fund Holders: 25
WD-40 Company (NASDAQ:WDFC) owns various brands that develop maintenance, cleaning, and home care products. It develops and sells products that solve problems in homes, workshops, and factories across the globe, including Solvol, WD-40 Multi-Use Product, no vac, 3-IN-ONE, WD-40 Specialist, GT85, 2000 Flushes, and Carpet Fresh.
The company reported net sales of $153.5 million in fiscal Q1 2025, an increase of 9% from fiscal Q1 2024. It also reported $145.5 million in net sales of its maintenance products in fiscal Q1 2025, the company’s core strategic focus. This reflects an increase of 10% from fiscal Q1 2024, and marks the third consecutive quarter of double-digit growth in this category.
WD-40 Company (NASDAQ:WDFC) is thus experiencing a strong volume performance. Around 90% of its growth in fiscal Q1 2025 was driven by increased sales volume, excluding the impact of the currency. The company plans to continue this momentum. It is focused on standardization and processes such as portfolio and project management. It is also streamlining approaches to solution-driven decision making.
In addition, WD-40 Company’s (NASDAQ:WDFC) increased focus on its key growth markets across the globe is continually yielding success. In fiscal 2025, it plans to continue building its flagship brand with end users worldwide. It is accelerating premiumization and targeting a compound annual growth rate for net sales of premiumized products of greater than 10%. The company ranks tenth on our list.
9. Newell Brands Inc. (NYSE:NWL)
Number of Hedge Fund Holders: 28
Newell Brands, Inc. (NYSE:NWL) is a global consumer goods company that manufactures, markets, and sells consumer and commercial products. Its Home and Commercial Solutions segment offers commercial cleaning and maintenance solutions, hygiene systems, garage and closet organization products, and others.
The company is focusing on its new corporate strategy, which it announced a year ago. This strategy entails disproportionately investing in brand building, innovation, and market excellence in its profitable and largest markets and brands. It is also driving scale efficiencies and standardization across its supply chain and back-office functions.
Newell Brands, Inc. (NYSE:NWL) has also transitioned into a new operating model designed to enhance its organization’s effectiveness and agility. The strategy and operating model changes have begun to yield results for the company and are expected to continue in the coming quarters. It reduced net debt by more than $560 million in the past five quarters. In addition, its normalized EBITDA increased by 2% on a trailing 12-month basis compared to the prior year, going from $739 million to $903 million. On January 17, Barclays maintained a Buy rating on Newell Brands and set a price target of $11.00. Newell Brands, Inc. (NYSE:NWL) takes the ninth spot on our list of the best soaps and cleaning materials stocks to buy now.
8. Church & Dwight Co., Inc. (NYSE:CHD)
Number of Hedge Fund Holders: 32
Church & Dwight Co. (NYSE:CHD) manufactures, develops, and markets a range of personal care, consumer household, and specialty products focused on cleaners, chemicals, animals, and food production. Its segments include Consumer Domestic, Consumer International, and Specialty Products Division (SPD).
The company’s domestic, international, and specialty products businesses are performing strongly. It experienced a reported sales growth of 3.8% in fiscal Q3 2024, exceeding its outlook of 2.5%. This was attributed to gross margin expansion and stronger than expected sales growth. Church & Dwight Co. (NYSE:CHD) also drove strong consumer demand across its portfolio in fiscal Q3 2024, reflecting the strength of its brands. To continue this growth, the company increased the investment of its brands. It expects to continue this investment into 2025 to drive consumption and share gains.
Its investments also focus on driving future growth through SG&A investments and improved marketing. The company ranks eighth on our list of the 10 best soaps and cleaning materials stocks to invest in.
7. Bath & Body Works, Inc. (NYSE:BBWI)
Number of Hedge Fund Holders: 36
Bath & Body Works, Inc. (NYSE:BBWI), previously known as L Brands, Inc., is a retailer of soaps and sanitizers, home fragrances, and body care products. According to Insider Monkey’s database, 36 funds had stakes in Bath & Body Works, Inc. (NYSE:BBWI) in the fiscal third quarter of 2024.
The company’s net sales for fiscal Q3 2024 were $1.6 billion, up 3% compared to last year. Its strategic investments and focused execution of the five E strategy are driving momentum toward long-term profitable growth for the company. The five Es of its strategy includes elevating the Bath and Body Works brand and core products, engaging with its core customers innovatively, extending its reach to new markets and adjacencies, enhancing its omnichannel experience, and enhancing operational efficiency and excellence. It made progress across all these categories in fiscal Q3 2024.
Bath & Body Works, Inc. (NYSE:BBWI) is also focusing on store expansion. It opened its 500th international store in London at the end of fiscal Q3 2024. Its partner store openings for the year are on track, with around 50 net new stores.
6. The Clorox Company (NYSE:CLX)
Number of Hedge Fund Holders: 41
The Clorox Company (NYSE:CLX) is a multinational marketer and professional and consumer goods manufacturer. It operates through four segments: Household, Health and Wellness, Lifestyle, and International. The Health and Wellness segment comprises cleaning, disinfecting, and professional products sold and marketed under various brands. The company’s International segment comprises products sold outside the US.
Its net sales increased 27% in fiscal Q1 2025 to $1.76 billion, a significant improvement compared to a 20% net sales decrease in the year-ago quarter. This growth was primarily driven by higher volume. The Clorox Company (NYSE:CLX) also delivered double-digital organic sales growth across all its reportable segments, fully restored overall market share, and grew shares in most categories. This reflects its strong operating model.
Fiscal Q1 2025 also marked the company’s eighth consecutive quarter of gross margin expansion, supported by cost savings. The Clorox Company (NYSE:CLX) is on track to fully rebuild its gross margin in fiscal 2025. It ranks sixth on our list of the 10 best soaps and cleaning materials stocks to invest in.
5. Kimberly-Clark Corporation (NYSE:KMB)
Number of Hedge Fund Holders: 45
Kimberly-Clark Corporation (NYSE:KMB) manufactures and markets a range of products by employing advanced technologies in absorbency, nonwovens, and fibers. It operates in three segments: the Personal Care segment, the Consumer Tissue segment, and the K-C Professional segment. It sells its products under various brands, including Kleenex, Scott, Cottonelle, DryNites, Huggies, and others.
The company is known to produce consistent results irrespective of the economic cycle, giving it the reputation of a stock that manages well even during a broader market sell-off. It is, however, experiencing volume and pricing pressure. Consolidated volumes grew by only 1% in the first three quarters of fiscal 2024, and net prices increased by 2%. These headwinds are caused by several factors, such as retail inventory reductions as its service levels improve, weaker demand in North American professional channels, decreased demand in private label businesses, and pockets of deceleration in Latin America and Asia.
Although the company’s growth does not paint a positive picture, it is a source of passive income at value. This is why investors with more interest in dividend income instead of potential capital gains are bullish on Kimberly-Clark Corporation (NYSE:KMB). It is driving consumption and growing its share across markets and categories, supported by increased commercial execution and acceleration in innovation. It ranks fifth on our list of the best soaps and cleaning materials stocks to invest in.
4. Ecolab Inc. (NYSE:ECL)
Number of Hedge Fund Holders: 47
Ecolab Inc. (NYSE:ECL) offers hygiene, water, and infection prevention solutions and services. The company’s Global Institutional & Specialty, and Global Healthcare & Life Sciences segments provide specialized cleaning and sanitizing products.
Revenue for the company’s fiscal Q3 2024 was just under $4 billion, showing a 1% increase from fiscal Q3 2023 despite headwinds. The company’s effective cost strategies and strong sales performance across core segments were the primary reasons behind this trend. Its cost management strategies led to a 260 basis points rise in its organic operating income margin, reaching 17.9%. Ecolab Inc.’s (NYSE:ECL) free cash flow also increased by 35% to $1.4 billion, reflecting the company’s financial stability. This allowed it to repurchase 1.9 million shares.
In its outlook for fiscal 2024, the company expects its adjusted EPS to demonstrate a 27% to 29% improvement over 2023. This upward trend reflects confidence in Ecolab Inc.’s (NYSE:ECL) present business drivers, including operational efficiencies and strategic acquisitions. The company is optimistic about attaining 12% to 15% adjusted EPS growth in fiscal 2025. Its existing investments in sustainable and innovative solutions are expected to support this growth.
Mairs & Power stated the following regarding Ecolab Inc. (NYSE:ECL) in its fourth quarter 2023 investor letter:
“All of our Materials holdings—Ecolab Inc. (NYSE:ECL), HB Fuller (FUL), and Sherwin Williams (SHW)—also posted strong results in 2023, a stark reversal from the prior year. After oil prices spiked above $100 in 2022 due to the Ukraine-Russia Conflict, oil has since pulled back to the low $70s. Oil and its by-products are major inputs for all of our Materials holdings; as such, lower oil prices have led to a rebound in profits. For example, our largest Materials holding—Ecolab—is expected to increase earnings more than 15% this year after declining 5% last year.”
3. Colgate-Palmolive Company (NYSE:CL)
Number of Hedge Fund Holders: 54
The Colgate-Palmolive Company (NYSE:CL) manufactures and sells various products for the personal and home care markets and operates in two product segments: Oral, Personal, and Home Care, and Pet Nutrition. The Oral, Personal, and Home Care segment sells cleaning products worldwide. Its brand portfolio includes several reputable brands, including Colgate, Palmolive, Irish Spring, Sorriso, Protex, meridol, Axion, Sanex, and others.
The company’s business is performing very strongly. Its strategy of delivering premium innovation and impact core products, improving brand health and household penetration, and increasing its advertising spending is yielding results. In fiscal Q3 2024, the company delivered volume growth in all six divisions for the second consecutive quarter, along with 3% and 4.6% growth in developed and emerging markets, respectively.
The Colgate-Palmolive Company (NYSE:CL) is geographically diversified, which gives it a competitive industry advantage. North America made up only 20% of its fiscal Q3 2024 sales, with the rest coming from Latin America (23%), Europe (15%), Asia Pacific (14%), and Africa/Eurasia (6%). Furthermore, the company has paid uninterrupted dividends since 1895, another reason why investors are bullish on the stock. It has increased its dividend for 61 consecutive years and now yields 2.2%, higher than the S&P 500 yield of 1.2%. It ranks third on our list.
ClearBridge Investments’ ClearBridge Sustainability Leaders Strategy stated the following regarding Colgate-Palmolive Company (NYSE:CL) in its Q2 2024 investor letter:
“Colgate-Palmolive Company (NYSE:CL), added to the portfolio in 2023, started outperforming materially toward the tail end of last year as growth, margin and market share momentum began to turn favorably, and that momentum has continued year to date as the stock has nicely outperformed the large cap staples group. The fundamental upside has been driven by a combination of healthy organic growth (with positive volumes), good gross margin progression, and strong re-investment spending supporting market share gains and future growth.”
2. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 68
The Procter & Gamble Company (NYSE:PG) provides branded consumer packaged goods to consumers across the globe. Its operations are divided into Fabric & Home Care, Grooming, Beauty, Health Care, Feminine & Family Care, and Baby. The company boasts a strong portfolio of brands, which includes reputable names such as Head & Shoulders, Pantene, Safeguard, Tide, Always, Venus, Oral-B, Ariel, Crest, Tampax, and others.
Organic sales for the company’s fiscal Q1 2025 grew by 2%, affirming its position as a consumer staples giant in the sector. For fiscal 2025, it expects to pay dividends worth $10 billion and repurchase around $6 billion to $7 billion in stock. This dividend cost is the direct result of a 7% dividend increase that the company announced in April.
However, The Procter & Gamble Company (NYSE:PG) expects its operating environment to remain volatile and challenging, primarily due to input costs to currencies to consumers, competitors, retailers, and geopolitical dynamics. Despite these headwinds, it expects 2% to 4% sales growth in fiscal 2025 and a 10% to 12% diluted net EPS growth. The Procter & Gamble Company’s (NYSE:PG) recession-resilient business model, a mix of dividends and buybacks, and a historical trend of dividend raises make it one of the best soaps and cleaning materials stocks to invest in.
1. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 81
Johnson & Johnson (NYSE:JNJ) develops and manufactures various products in the healthcare industry and sells baby soaps through its brand, Johnson Baby.
It reported sales growth of 5.2% to $22.5 billion in fiscal Q3 2024, with an operational increase of 6.3%. Its worldwide sales for fiscal Q3 2024 were $22.5 billion. Sales grew by 6.3%, with a growth of 7.6% recorded in the United States and 4.6% outside the US. Divestitures and acquisitions positively impacted the company’s worldwide growth by 90 basis points.
On January 13, the company announced the acquisition of Intra-Cellular Therapies, Inc. (NASDAQ:ITCI) to strengthen its leadership in neuroscience. It has thus become a broadly diversified pharmaceutical and medtech company. In fiscal 2024, the company invested $18 billion in high-innovation, high-growth M&A. It is also continuing to strategically invest in research and development at competitive levels, investing around $5 billion, or 22% of its sales.
Johnson & Johnson’s (NYSE:JNJ) high innovation and high growth strategy is working, and its quarterly progress corroborates that. For the third quarter in a row, it has increased its adjusted operational EPS guidance pre-M&A. Based on its operations, the company exhibits confidence in its growth expectations for 2025 through the decade’s end and beyond.
ClearBridge Investments made the following comment about Johnson & Johnson (NYSE:JNJ) in its Q3 2023 investor letter:
“The health care space provided some opportunities in the quarter, as we increased our exposure to medical device company Becton, Dickinson as well as large-cap pharmaceutical company Johnson & Johnson (NYSE:JNJ). Johnson & Johnson recently spun out its consumer health care business, becoming a more focused yet broadly diversified pharmaceutical and medtech company.”
Overall, JNJ ranks first among the 10 best soaps and cleaning materials stocks to invest in. While we acknowledge the potential of soaps and cleaning materials stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than JNJ but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stock To Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
