Household and Personal Care Portfolio Candidates: The Clorox Company (CLX), Colgate-Palmolive Company (CL)

The Clorox Company (NYSE:CLX) is not a small company but, with a market capitalization of $10.2 billion, is still a possible M&A target. Even while the company’s growth potential is somewhat limited by its category and geographic exposure, CLX continues to grow ahead of its underlying categories, primarily as a result of strong innovation momentum and mix improvement. CLX has established a track record for shareholder value creation by showing capital discipline, not just in terms of cost savings, but also in M&A situations and by carefully prioritizing organic growth opportunities. CLX is my to pick within the HPC sector. I always try to stress that, as small passive investors, we benefit either from cash dividends or M&A activity. CLX, trading at 2013 17x P/E and with a 6.2% FCF yield, pays a 3.5% cash dividend yield and offers a potential M&A exit window. I just love this name at the current price.

This three companies should be perfect candidates for any portfolio looking for growth stability and a growing cash dividend yield. My personal pick is CLX above the others because I consider it a great M&A candidate going forward but CL is also a great company with an amazing Emerging Markets footprint. I consider PG fairly valued right now given its size and current turnaround efforts but it’s always a good portfolio option for any conservative investor.

The article Household and Personal Care Portfolio Candidates originally appeared on Fool.com and is written by Federico Zaldua.

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