We recently published a list of the 12 Best Household Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Kimberly-Clark Corporation (NYSE:KMB) stands against the other best household stocks to buy according to hedge funds.
Is There a Softening in the Consumer Staple Sector?
On March 21, Bryan Spillane, Bank of America Securities’ senior food and beverage analyst, appeared on CNBC’s ‘The Exchange’ to discuss things across his space and the trends surrounding consumer staples. He said that going through the first quarter of the year and having check-ins with companies has led him to conclude that the conditions in the sector have been soft, which is true across his entire coverage universe. Consumers are pulling back a bit, and there’s uncertainty surrounding the conditions in the sector. What’s surprising is that these trends started in January and extended through the first quarter.
The sector, however, is showing a dichotomy. Spillane believed this is a market for consumer staples, as we are looking for defensiveness and certainty. But at the same time, we are doing that at a time when the fundamentals appear to be decelerating. This creates a dynamic for investors to really understand the market and where it would be best to put their money in, as not all seem as safe as they would typically be.
READ ALSO: 10 Best Strong Buy Stocks To Buy Right Now and 10 Best Vegan Stocks to Buy According to Analysts.
The Biggest Challenge in Consumer Staples
According to Spillane, the biggest challenges right now are in the beverage alcohol sector specifically, which dropped off unexpectedly in the first quarter of this year after a weak fourth quarter last year. This can be attributed to visa issues, as cohorts of consumers are not spending as much as before. Similar trends are now materializing in household products and personal care categories as well. While these sectors have been very resilient over the past three years, they are now beginning to show signs of a slowdown. The conditions are a head-scratcher, because these are the products consumers use every day. Thus, general uncertainty around a cohort of consumers, including visa holders and students, is beginning to materialize in the sector’s performance.
These trends have resulted in concerns about whether staples would be less of a safe haven this time around. Addressing these concerns, Spillane said that staples would still be a safe haven if we consider them relative to the world we are living in. Large liquid consumer staples are still a place investors would want to be if they are looking for a place to hide in uncertainty, as they are likely to generate considerable cash flows and pay dividends.
Our Methodology
We sifted through stock screeners, financial media reports, and ETFs to compile a list of 20 household stocks. We then selected the top 12 with the highest number of hedge fund holders, as of Q4 2024, and ranked them in ascending order. We sourced the hedge fund sentiment data from Insider Monkey’s database.
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 373.4% since May 2014, beating its benchmark by 218 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 Holders: 50
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.
In fiscal Q4 2024, Kimberly-Clark Corporation (NYSE:KMB) reported revenue of $4.9 billion, exceeding analyst estimates of $4.85 billion by 1.5%. Despite challenges from foreign currency fluctuations and strategic divestitures, the company demonstrated revenue resilience, supported by a 2.3% rise in organic sales.
Kimberly-Clark Corporation (NYSE:KMB) generated an operating cash flow of $3.2 billion in the full year 2024 and paid $2.6 billion to shareholders through dividends and share repurchases. On January 28, the company declared a 3.3% hike in its quarterly dividend to $1.26 per share, marking its 52nd consecutive year of dividend growth.
In a report released on March 19, Bryan Spillane from Bank of America Securities reiterated a Buy rating on Kimberly-Clark Corporation (NYSE:KMB) with a price target of $160.00.
Overall, KMB ranks 4th on our list of the best household stocks to buy according to hedge funds. While we acknowledge the potential of KMB as an investment, our conviction lies in the belief that 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.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
