In this article, we will look at the 8 Best Cleaning Materials Stocks To Invest In Now.
Investors are reacting to an array of geopolitical and economic developments as volatility in the US equity market edges higher heading into year-end. The upcoming US election is posing a significant headwind that is taking a toll on sentiments in the equity markets. Similarly, concerns of a slowing economy crumbling amid high interest rates is also leading investors to rethink their investment portfolios.
Will the Soft Landing Narrative Play Out the Way Investors Want?
On October 16, Saira Malik, Nuveen CIO and head of equities and fixed income, joined CNBC’s ‘Squawk Box’ to discuss the latest market trends, whether the soft landing narrative will play out, and the state of the economy, among others. She said that concerns exist over whether the soft landing narrative will play out the way investors want or not.
Investors are drinking the Kool Aid when it comes to a soft landing, and that can be seen in the earnings seasons so far where companies are coming in reasonably strong, especially in the non-tech side. The consumer also looks strong. But the bar is pretty low for this earnings season, with a 4% year over year earnings growth expected as compared to last quarter’s 11%. Thus, Malik is of the view that the narrative might not play out exactly the way it was anticipated.
How to Hedge Your Portfolio Amid Market Volatility
On August 8, Tiffany McGhee, CEO and CIO of Pivotal Advisors, appeared on CNBC to discuss the market’s volatility and ways to hedge your portfolio. She expressed her inclination towards holding a diversified portfolio and an asset allocation strategy set. She said that it is really exciting getting caught up in the large-cap growth stocks that really drive the performance of the market for so long. But it is really important to have a balance portfolio, and thus she reiterated that investors should really consider having defensive stocks if they don’t have any.
Defensive stocks have long been a popular addition to portfolios, as they hold the potential to protect investors from the transitions of the stock market. They can produce good income, stable returns, and pose long-term value for investors. With these trends in view, let’s look at the 8 best cleaning materials stocks to invest in now.
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Our Methodology
To ranks the 8 best cleaning materials stocks to invest in now, we used the Finviz screener, ETFs, and online rankings to first identify the top cleaning material stocks. We then selected 8 stocks that were also the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of their hedge fund holders as of Q2 2024.
Why are we interested in the stocks that hedge funds pile into? 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).
8 Best Cleaning Materials Stocks To Invest In Now
8. Unilever PLC (NYSE:UL)
Number of Hedge Fund Holders as of Q2 2024: 21
Unilever PLC (NYSE:UL) is a fast-moving consumer goods company based in the United Kingdom. It operates under five segments: Personal Care, Home Care, Beauty and Well-Being, Nutrition, and Ice Cream. Its primary focus has been on delivering high-quality sales growth and expanding its gross margin, allowing a step-up in investment behind its brands in the first half of 2024.
The company has made substantial progress over the year’s first half, with its underlying sales growing 4.1%. Volume growth accelerated to 2.6% and was primarily broad-based. Growth was majorly led by Unilever’s Power Brands, with an underlying sales growth of 5.7% and volumes up by 4%. The core part of its plans is to focus on its brands, so the results were encouraging for the company. Gross margin expansion was strong, up 420 basis points to 45.7%. In addition, the company recorded reduced material costs.
Unilever (NYSE:UL) is on the path to attaining net cost productivity via tight cost control in its operations. These impacts strengthened the company’s gross margin development in the first half and allowed around €700 million ($758.95 million) in extra marketing and brand investment, which went behind a strong and focused innovation program.
The company has been implementing its growth action plan at pace over the last quarter, improving financial performance and incorporating sustainability leadership in its four priority areas: climate, nature, plastics, and livelihoods. It made progress across all four areas in the first half of 2024 and thus boasts a favorable future outlook. Unilever (NYSE:UL) takes the eighth spot on our list of the 8 best cleaning materials stocks to invest in now.
7. WD-40 Company (NASDAQ:WDFC)
Number of Hedge Fund Holders as of Q2 2024: 22
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’s maintenance products include multi-purpose maintenance and specialty maintenance items. WD-40 Company (NASDAQ:WDFC) has operations in more than 176 countries worldwide. Its Q3 2024 results mark the third consecutive quarter of sales growth across all three of its trade blocks.
Its net sales reached $155 million, an increase of more than 9%, making Q3 a record quarter for the company. In addition, sales of maintenance products increased more than 10% for both year-to-date and Q3, aligning with the company’s long-term growth targets.
The positive trends seen in the first half of 2024 continued in Q3, with sales volumes continuing to improve. Most of the company’s sales growth in Q3 was driven by volume. Sales in the Americas (including the US, Canada, and Latin America) grew by around 6% over the past year, reaching $75.1 million. A majority of this growth was driven by increased sales of the WD-40 Multi-Use Products, which grew 7% compared to the previous year. Most of this strong sales growth came from Latin America, which underwent an increase of 51% year-over-year. Sales in Latin America were positively impacted by the company’s transition to a direct market model in Brazil.
WD-40 Company (NASDAQ:WDFC) is regularly focused on employing targeted sampling programs to build brand awareness. It is growing its distribution network as a simple yet effective strategy that works for the company. It ranks seventh on our list of the 8 best cleaning materials stocks to invest in now.
6. Church & Dwight Co. (NYSE:CHD)
Number of Hedge Fund Holders as of Q2 2024: 36
Church & Dwight Co. (NYSE:CHD) manufactures, develops, and markets a range of personal care and consumer household products 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 has strong fundamentals, with Q2 2024 financial results showing a solid quarter for Church & Dwight Co. (NYSE:CHD). Its sales growth reached 3.9%, surpassing its outlook of 3.5%.
This growth was primarily because of the strong results across the board from the company’s three operation segments. Organic sales also exceeded company expectations, growing by 4.7% instead of the anticipated 4%. Volume accounted for a healthy 3.5% of its growth. It also increased its market spending, gaining market share in a majority of its categories.
These positive results were driven by gross margin expansion and higher-than-anticipated sales growth. The company is continuing to grow in the online class of trade, with online sales as a percentage of its global sales touching 21.2%. It has a robust growth model, with its organic sales growth in the US consumer business reaching 3.8%.
In addition, its international business delivered an organic sales growth of 9.3% in Q2, driven by solid growth in the subsidiaries and the company’s Global Markets Group.
5. The Clorox Company (NYSE:CLX)
Number of Hedge Fund Holders as of Q2 2024: 38
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.
The Clorox Company (NYSE:CLX) ended fiscal 2024 with solid operation strength, fully restoring its supply and distribution and recovering most of its lost market share. Despite the significant disruption caused by the cyber attack, which led to an 18% organic sales decline in Q1, the company closed out with flat organic sales for the complete year.
Its Q4 2024 results highlight the continuous advancement of its strategy, which focuses on accelerating profitable growth, strengthening its competitive advantage, and setting the company up for long-term success. The company is also focusing on recovering from the cyber-attack that occurred earlier in the year.
The Clorox Company (NYSE:CLX) is rebuilding its margin to fuel growth and has delivered its seventh consecutive quarter of margin expansion. It is on the path to bounce back to its pre-pandemic gross margins in fiscal year 2025. Although consumers are expected to remain under pressure in FY 2025, the company has a strong portfolio of brands in essential categories that have shown resilience during uncertain and challenging times. It is continually investing in its brands to maintain the value superiority that gives it a competitive market edge.
The company’s future plans at the investment level are strong. They aim to deliver a robust financial performance in FY 2025 and win consumers. This is supported by a bounce back to pre-pandemic gross margin, volume-driven sales growth, and free cash flow aligning with its long-term goals. It ranks fifth on our list of the 8 best cleaning materials stocks to invest in now.
4. Ecolab Inc. (NYSE:ECL)
Number of Hedge Fund Holders as of Q2 2024: 42
Ecolab Inc. (NYSE:ECL) offers cleaning and sanitizing products and operates in four segments: Global Industrial, Global Institutional & Specialty, Global Healthcare & Life Sciences, and Global Pest Elimination.
The company is on the path to growth. It experienced a 35% adjusted earnings growth in Q2, with 25% to 29% earnings growth expected for the entire year. Its robust business momentum continued in Q2, delivering for its customers and shareholders. Organic sales growth stayed in its previously forecasted 4% to 5% range, with performance across the rest of the company’s segment improved.
This growth continues to be leveraged by its exceptional organic operating income margin expansion. With solid top-line momentum and its operating margins expanding towards the 20% target, Ecolab Inc. (NYSE:ECL) is on the path to attaining its long-term 12 to 15 earnings growth trajectory.
To support its long-term growth journey, the company is taking on its One Ecolab initiative that will help fuel 5% to 7% long-term organic sales growth and continue the expansion of its operating margins towards 20% and beyond. The company ranks fourth on our list of the 8 best cleaning material stocks to invest in now.
Mairs & Power Growth Fund 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. Kimberly-Clark Corporation (NYSE:KMB)
Number of Hedge Fund Holders as of Q2 2024: 43
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. Kimberly-Clark Corporation (NYSE:KMB) is accelerating investments to build its brands, powerhouse categories, and innovative pipeline.
It is effectively managing its external dynamics, driving its consumer-centric culture, and making the company stronger, faster, and better. It is also turbocharging its ability to offer better care to customers, ramping up its investments and leveraging its core strengths to unlock the company’s complete potential.
Its Q2 2024 results were characterized by positive volume driven by innovative new products, pioneering, and leveraging continued productivity momentum for solid earnings growth compared to the prior-year period.
Overall, Kimberly-Clark Corporation (NYSE:KMB) has a solid foundation to leverage and accelerate investments across its operations. Its primary focus for the future lies in delivering consumer solutions at every price point, improving its long-term potential, and boosting its operational scale.
2. Colgate-Palmolive Company (NYSE:CL)
Number of Hedge Fund Holders as of Q2 2024: 52
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, along with Pet Nutrition. The Oral, Personal, and Home Care segment sells cleaning products throughout the globe, managed geographically in five segments, including North America, Europe, Latin America, Africa/Eurasia, and Asia Pacific. These products are sold to wholesalers, traditional and e-commerce retailers, distributors, dentists, and skin health professionals.
The company’s products are sold under several reputable brand names, including Colgate, Palmolive, Irish Spring, Sorriso, Protex, meridol, Axion, Sanex, and several more. The Colgate-Palmolive Company (NYSE:CL) aims to deliver consistent compounded earnings growth, and it is driving balanced organic sales growth across all six divisions and four categories. It is doing so with a combination of volume and pricing growth.
It has revamped its innovation model, invested in marketing spend, leveraged its global strength across price tiers, scaling new capabilities across the organization to drive brand health and boost household penetration. An early success for this strategy is the company’s return to mid-single-digital volume growth in Q2.
The Colgate-Palmolive Company (NYSE:CL) is also leveraging data and analytics tools, including AI, to track the effectiveness of these activities and optimize the return on its increased spending. With the effective combination of the company’s continued success in revenue growth management strategy and increased penetration, it plans to drive consistent, balanced top-line growth. It takes the second spot on our list of the 8 best cleaning material stocks to invest in now.
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.”
1. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders as of Q2 2024: 64
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.
The company is running on solid fundamentals, with fiscal 2024 proving to be another strong year. Its successful execution of integrated strategies allowed the company to meet or exceed its guidance ranges for core EPS growth, organic sales growth, cash return to shareowners, and cash productivity.
Organic sales growth for fiscal 2024 was 4%, making it the company’s sixth consecutive year of 4% of better organic growth. Growth was primarily broad-based across business units, with 8 out of 10 product categories showing organic sales growth. Hair care, grooming, and home care increased high single digits, with oral care and feminine care up mid-singles. Similarly, fabric care, personal healthcare, and family care grew low singles.
Focus markets for the Procter & Gamble Company (NYSE:PG) grew 4% for the year, with North America growing by 5% and Europe focus markets experiencing an 8% growth. The company is working in innovative ways with retailers on the totality of the supply chain end-to-end instead of just trying to optimize its respective pieces.
For instance, it is using data and machine learning algorithms to optimize truck scheduling time and reduce idle time for drivers. It is also employing digital tools to optimize fill rates and improve its dynamic routing and sourcing optimization. These areas have saving opportunities worth $200 million to $300 million, giving the company greater effectiveness and efficiency.
The company is taking targeted steps to reduce overhead while digitizing its operations. Procter & Gamble Company (NYSE:PG) is looking to extend its competitive advantage by adapting and creating new technologies, being willing to change, and developing technologies that will shape the future of the industry.
Overall, PG ranks first among the 8 best cleaning materials stocks to invest in now. While we acknowledge the potential of 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 timeframe. If you are looking for an AI stock that is more promising than PG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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