Ecolab Inc. (ECL) – Church & Dwight Co., Inc. (CHD): An American Icon Since 1846

Stepan Company (NYSE:SCL) produces and markets specialty and intermediate chemicals worldwide. Its main focus is on surfactants, polymers, and specialty products; these three segments manufacture chemicals used to produce cleaning products, insulation and adhesives, and nutritional oils.

(Source: Yahoo! Finance and YCharts)

The three are all very similar, but can be differentiated enough that they are not direct competitors. Church & Dwight offers products to the individual consumer, but also has a large segment answering to the baking soda needs of larger industrial companies. Ecolab Inc. (NYSE:ECL)’s focus is more on business-to-business sales and Stepan Company (NYSE:SCL) provides the ingredients needed to manufacture end products.

With that said, they all have strong fundamentals. However, Church & Dwight is the only one that is not trading well above its average price-to-earnings multiple. This means Ecolab Inc. (NYSE:ECL) and Stepan have room to come down, while Church & Dwight could trade sideways and still remain healthy for the rest of the year. Ecolab Inc. (NYSE:ECL) is a strong dividend play, with consecutive raises for 20 years, but I would like to see it come down another 5% before considering an investment. Stepan does not command enough market share for my interest, so I would steer clear of this one for now.

The bottom line
Church & Dwight Co., Inc. (NYSE:CHD) is an undervalued American icon that has the potential to outperform the market for the next decade. It has grown earnings by 10% or more in 17 of the past 18 years, and it is expected to maintain a strong growth rate through 2015. Do your portfolio a favor and take a closer look at this one.

The article Church & Dwight: An American Icon Since 1846 originally appeared on Fool.com and is written by Joseph Solitro.

Joseph Solitro has no position in any stocks mentioned. The Motley Fool owns shares of Ecolab.

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