Morgan Stanley’s Highest Conviction Stocks: Top 20 Stocks To Buy

16. Colgate-Palmolive Company (NYSE:CL)

Share Price Upside: 9%

Number of Hedge Fund Investors In Q2 2024: 52

Colgate-Palmolive Company (NYSE:CL) is a globally sold personal care and grooming brand, known for its toothpaste, toothbrushes, and other products. A leading player in particularly the toothpaste market, the firm commanded 41% of this market in mid 2023. The dominant position allows Colgate-Palmolive Company (NYSE:CL) to grow by raising prices in an inflationary market or maintaining revenue even when the economy is struggling due to the essential nature of its products. Colgate-Palmolive Company (NYSE:CL) also maintains key advantages over rivals through effective cost controls. Its trailing twelve month gross margins are 59.7%, which marks a nine percentage point lead over its closest rival P&G despite the fact that P&G’s revenue of $84 billion is significantly higher than Colgate-Palmolive Company (NYSE:CL)’s TTM figures of $19.9 billion. Along with margins, the key to Colgate-Palmolive Company (NYSE:CL)’s hypothesis are its ability to grow organically by increasing volumes and targeting emerging markets such as Latin America. At the same time, foreign markets also leave it vulnerable to a stronger US dollar that impacts revenue.

ClearBridge Investments mentioned Colgate-Palmolive Company (NYSE:CL) in its Q2 2024 investor letter. Here is what the firm said:

“Colgate-Palmolive, added to the portfolio in 2023, started outperforming materially toward the tail end of last year as growth, margin and market share momentum began to turn favorably, and that momentum has continued year to date as the stock has nicely outperformed the large cap staples group. The fundamental upside has been driven by a combination of healthy organic growth (with positive volumes), good gross margin progression, and strong re-investment spending supporting market share gains and future growth.”