We recently published an article titled Jim Cramer’s Thoughts On These 8 Stocks and the Packaged Goods Playbook. In this article, we are going to take a look at where The Clorox Company (NYSE:CLX) stands against the other stocks.
Jim Cramer, the host of Mad Money, recently took a deep dive into the challenges facing the consumer packaged goods sector, offering his perspective on the factors driving the decline of these stocks.
“The recent decline in the consumer packaged goods stocks, I find it breathtaking… Why is this happening? The truth is, there are a host of reasons, and every time you think that things have gotten better, they seem to have gotten worse, much worse than you’ve imagined.”
READ ALSO Jim Cramer’s Thoughts on These 9 Stocks and Jim Cramer Discussed 10 Stocks Leading the Dow Higher in 2025
Cramer noted that many companies within the sector seem to believe that younger consumers will settle for smaller portions of food and that this might mitigate some of the challenges. While Cramer acknowledged that this shift in consumer behavior is part of the equation, he argued that many companies are overlooking the significant impact of GLP-1 weight loss drugs. These medications, which curb cravings for junk food, pose a serious threat, as Cramer sees them as something that could be widely adopted in the United States. He then added:
“Oh, and let’s not forget about the problem of tariffs. You’re getting some sudden price increases for many goods. Someone has to pay for the tariffs. These companies hope it will be you because if it’s not you, it’s them.”
Another significant challenge for companies in the packaged goods space is the difficulty of raising prices. Cramer explained that while many companies try to increase prices, they often face fierce competition from major retailers and online marketplaces, which offer private-label products that consumers increasingly recognize as being just as good as the branded alternatives.
While private labels are not seeing explosive growth at the moment, Cramer pointed out that they are exerting pressure on all prices, including those of established brands. Furthermore, Cramer observed that the price hikes implemented during the COVID-19 pandemic have led to consumer fatigue, with many shoppers now seeking better value.
“I don’t know what turns around the consumer packaged goods stocks, mergers would make sense. This new antitrust department probably blessed the concentration. Maybe the companies that slash prices the deepest ultimately win. No matter, this moment is untenable. The stocks can’t find their footing, just too many forces against them. These used to be safety stocks for heaven’s sake, but they’re safe no more.”
Our Methodology
For this article, we compiled a list of 8 stocks that were discussed by Jim Cramer during the episode of Mad Money on February 5. We listed the stocks in the order that Cramer mentioned them. We also provided hedge fund sentiment for each stock as of the third quarter of 2024, which was taken from Insider Monkey’s database of 900 hedge funds.
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 team of professionals prepping for a training seminar, using professional cleaning products produced by the company.
The Clorox Company (NYSE:CLX)
Number of Hedge Fund Holders: 41
The Clorox Company (NYSE:CLX) manufactures and markets a wide range of consumer and professional products across various categories, including cleaning, disinfecting, household items, personal care, food products, and health supplements. Discussing how packaged goods stocks are getting hit these days, Cramer said, “Clorox got walled after a quarter that was not up to snuff.”
Cramer also noted that it is possible to get cheaper products than ones offered by Clorox (NYSE:CLX), giving the example of Chewy’s cat litter vs. Clorox’s Fresh Step cat litter. In January, Cramer discussed a few reasons behind the stock’s recent dips. Cramer noted that the challenges include rising long-term interest rates, which pressure dividend stock.
He also pointed out the growing pricing pressures from heavy discounts on products from major retailers and online marketplaces, making it harder for companies like Clorox (NYSE:CLX) to maintain margins. Cramer added:
“The dollar’s gotten too strong. These consumer packaged goods companies tend to be very big overseas. That’s not the case with Clorox, which is largely domestic. But you know how our stock market works. The consumer staples all trade together. If the dollar hurts a big international company like Procter & Gamble as it is, it’s gonna reverberate even into Clorox because they’re all in the same sector, and sector ETFs are like gravity.”
Overall CLX ranks 2nd on our list of the stocks Jim Cramer recently discussed. While we acknowledge the potential of CLX 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 timeframe. If you are looking for an AI stock that is more promising than CLX 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 Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article was originally published at Insider Monkey.
