2. Colgate-Palmolive Company (NYSE:CL)
Number of Hedge Fund Holders: 57
Market Capitalization as of December 6: $64.41 billion
Colgate-Palmolive Company (NYSE:CL) is a consumer staples company based in New York. The company is best known for its oral and personal product brands for toothpaste, toothbrushes, mouthwash, and more, such as the Colgate brand.
A Buy rating was reiterated on Colgate-Palmolive Company (NYSE:CL) shares on December 6 by analyst Steve Powers at Deutsche Bank.
In the first six months of 2022, Colgate-Palmolive Company (NYSE:CL) demonstrated continued leadership in toothpaste manufacturing, with its global market share at 39.6% year-to-date. Sales for the company’s Oral, Personal, and Home Care segment grew by 2.9% year-over-year to $958 million in North America. This growth represented strong demand for the toothpaste category in Oral Care.
Colgate-Palmolive Company (NYSE:CL) was found among the 13F holdings of 57 hedge funds in the third quarter. Their total stake value was $4.1 billion.
Third Point, a New York-based investment advisor, mentioned Colgate-Palmolive Company (NYSE:CL) in its third-quarter 2022 investor letter. Here’s what the firm said:
“Third Point recently acquired a significant position in Colgate-Palmolive Company (NYSE:CL). The investment fits several important criteria in the current investment environment. First, the business is defensive and has significant pricing power in inflationary conditions. Second, there is meaningful hidden value in the company’s Hill’s Pet Nutrition business, which we believe would command a premium multiple if separated from Colgate’s consumer assets. Third, there is a favorable industry backdrop in consumer health, with new entrants via spin-offs and potential for consolidation. Finally, the current valuation is attractive both because earnings growth is poised to inflect higher, and because shareholders are paying very little for the optionality around Hill’s or Colgate’s ability to participate in further consolidation in the consumer health sector.
Colgate has a strong portfolio of brands and operates across four categories that should perform well across most economic conditions: oral care, home care, personal care, and pet nutrition. Although Colgate has delivered organic sales growth of 5-6% over the past few years, earnings growth has been disappointing, and the stock has become a perennial underperformer. Foreign exchange headwinds have pressured reported results. Business reinvestment, supply chain disruption, and inflationary pressures have weighed heavily on margins; those headwinds are now reversing. Stepped up investments in demand generation, product innovation, and digital capabilities are starting to pay off. Global supply chain bottlenecks are easing and product availability on the shelf is improving. And, most importantly, raw material, transportation, and wage pressures are stabilizing, and even reversing in some areas, at the same time additional pricing takes effect. Taken together, the stage is set for Colgate to deliver several years of outsized earnings growth, as sales continue to increase, foreign exchange movements are annualized, and margins finally recover…” (Click here to view the full text)
