We recently compiled a list of the 10 Best Household and Personal Care Stocks to Buy. In this article, we are going to take a look at where Kimberly-Clark Corporation (NYSE:KMB) stands against the other household and personal care stocks.
According to Grand View Research, the global market for beauty and personal care products is projected to increase at a CAGR of 7.7% from 2024 to 2030. The market was valued at $557.24 billion in 2023. Growing customer awareness of appearance is one of the main forces propelling market progress. In terms of type, in 2023 the conventional beauty and personal care market held the highest revenue share of 84.6%. Last year, the skincare segment brought in 33.7% of the total revenue from the beauty and personal care products market, while the market for haircare products is anticipated to expand between 2024 and 2030 at a CAGR of more than 8.1%. Regionally, the Asia Pacific beauty and personal care products market dominated the global market in 2023, accounting for 39.3% of total revenue, and is predicted to rise at a CAGR of approximately 9% from 2024 to 2030 as per the research.
Specifically, the market for personal care products in the United States was estimated to be around $73.17 billion in 2023 and is anticipated to grow at a CAGR of 6.1% between 2024 and 2030. The primary driver of the personal care products market’s expansion in the United States is the country’s aging population. The number of Americans 65 and older increased from 49.2 million in 2016 to 57.8 million in 2022, according to the US Census Bureau. In 2022, they made up 17.3% of the entire population. These individuals are primarily interested in healthcare products that help them retain a youthful appearance.
The purpose of regulations in the market for beauty and personal care goods is to guarantee product efficacy and consumer safety. Government organizations that regulate the industry, such as the European Commission in the European Union and the Food and Drug Administration (FDA) in the United States, set standards for product ingredients, labeling, and advertising.
On the other hand, Expert Market Research estimates that the global market for household care was valued at $106.40 billion in 2023. In order to reach a value of approximately $148.01 billion by 2032, the market is anticipated to grow at a CAGR of 3.7% during the forecast period of 2024-2032, according to the research. The market is being driven by a growing focus on cleanliness and health care, a growing popularity of washing machines, and the rising demand for household care goods like laundry detergents. In addition, the market’s primary regions include Europe, Asia Pacific, North America, Latin America, the Middle East, and Africa.
According to Deloitte’s 2024 consumer products industry outlook, as growing prices hit their limit in an unstable economy, the consumer products industry is predicted to shift from price-taking strategies to concentrating on “profitable volume” in 2024. Businesses that have performed well recently have demonstrated increased revenue and improved return on assets (ROA) by striking a balance between pricing power, innovation, and supply chain efficiency. The profitable expansion will depend on increasing volume while improving the product mix and holding onto as much pricing power as is practical, as additional price increases will encounter resistance from both retailers and cost-conscious consumers.
Advantageous mergers and acquisitions, strategic innovation, targeted advertising, and precision revenue growth management will be important strategies. Improved supply chain management and operational effectiveness are also essential. The consumer product executives Deloitte surveyed are cautious about maintaining volume and margin expansion in a difficult geopolitical climate, even with a positive outlook. It will be up to leaders to manage new and developing rules like the Corporate Sustainability Reporting Directive, GLP-1 weight-loss drugs, and generative AI.
Methodology:
We sifted through holdings of household and personal care ETFs and online rankings to form an initial list of 20 household and personal care stocks. Then we selected the 10 stocks that were the most popular among institutional investors. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024. We have used the stock’s market cap as a tie-breaker in case two or more stocks have the same number of hedge funds invested.
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)
A stack of disposable diapers in the foreground with a mother and her baby in the background.
Kimberly-Clark Corporation (NYSE:KMB)
Number of Hedge Fund Investors: 43
Kimberly-Clark Corporation (NYSE:KMB) is one of the industry’s top manufacturers of tissue and hygiene products; its brands include Huggies, PullUps, Kotex, Depend, Kleenex, and Cottonelle. It also runs a company called K-C Professional, which works with companies to offer hygienic and safety solutions for the workplace. The company makes up more than fifty percent of its sales from personal care products and another third from consumer tissue products. The remaining sales are mostly from Asia and Latin America.
Similar to its contenders, the company has faced numerous difficulties, such as a sluggish economy and increased cost pressures. In this regard, management has been candid about the company’s declining market share and the fact that consumers are increasingly moving to less expensive options in certain categories to save money. However, given that supply and demand imbalances in the industry have largely been resolved, analysts believe this could lead to a spike in growth throughout the company’s categories.
Having a goal toward approximately $3.7 billion in savings and productivity gains, Kimberly is about to unlock efficiency and cut costs through technological advancements, supply chain enhancements, and organizational reorganization, as per Morningstar analysts. This should encourage reinvestment in the company while increasing earnings.
With a $160 price target, Bank of America Securities’ Anna Lizzul kept her Buy rating on the firm. Its impressive EPS performance, personal care volume growth, and margin expansion more than make up for the minor top-line disappointment. Lizzul is confident that Kimberly-Clark Corporation (NYSE:KMB) can overcome cost obstacles and leverage its growth plans, as seen by its optimistic forecast.
It is also one of the “10 Stocks Jim Cramer Thinks You Should Check Out.” He states:
“Kimberly-Clark is a Dallas-based company, and like the best NFL defenses, it can give you steady production from its 3.3% yield along with upside from real organic growth. They had 4% organic growth in the most recent quarter, and with rate cuts on the horizon, it’ll be a good year for high-yielding consumer staples, and Kimberly-Clark is among the best of the best. Hence the Cowboys analogy. Cowboys, don’t get mad at me—I thought your defense was great! You annihilated us Eagles when we went down to see you in Dallas.”
Jean-Marie Eveillard’s First Eagle Investment Management is the largest shareholder in the company, with 9,025,827 shares worth $875.87 million.
Overall KMB ranks 4th on our list of the best household and personal care stocks to buy. While we acknowledge the potential of KMB as an investment, our conviction lies in the belief that some 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 KMB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.