One of the less-talked about consumer-stable stocks is The Clorox Company (NYSE:CLX), however it could easily be the best. This $11-billion market cap producer of household cleaning and specialty food products is mostly overshadowed by the likes of The Procter & Gamble Company (NYSE:PG) and Colgate-Palmolive Company (NYSE:CL), both with market caps in excess of $50 billion.
The Clorox Company (NYSE:CLX) gets around 80% of sales from the U.S., with liquid bleach representing about 13% of total net sales, trash bags 13%, and charcoal 11%. This product portfolio of consumer stables helps the company sustain economic swings and downturns, hence the low beta.
The consumer-products company is looking to expand beyond the U.S.; this includes focusing on Asia and the Middle East. The Clorox Company (NYSE:CLX) also plans to continue looking to acquisitions to help grow sales, where it recently bought up Aplicare and HealthLink, both in the health and wellness industry.
Toothpaste giant
Colgate-Palmolive Company (NYSE:CL) is one of the top consumer-products companies, offering products to more than 200 countries. It is expected to see sales up only 3% in 2013, with 6% organic growth expected to be driven by Colgate’s exposure to fast growing international markets.
Unlike The Clorox Company (NYSE:CLX), which gets 80% of sales from the U.S., Colgate-Palmolive Company (NYSE:CL) gets 80% of sales from outside the U.S. and 50% specifically from the emerging markets. Its oral- and personal-care products account for 87% of sales; these items include toothbrushes, toothpaste, soaps, shampoos, deodorants, Palmolive and Ajax soaps.
Last month, Colgate-Palmolive Company (NYSE:CL) lowered its 2013 earnings expectations due to continued pressure in international markets, namely Latin America. The big issue here is the devaluation of the Venezuelan bolivar. Last quarter, this contributed to a 1.5% sales decrease in Latin America. New guidance includes EPS growth expectations of 4.5% to 5.5% for 2013 — down one percentage point from prior guidance.
Fellow small timer
Church & Dwight Co., Inc. (NYSE:CHD) is another smaller consumer-products company, like The Clorox Company (NYSE:CLX), with an $8.7 billion market cap. Church & Dwight pays a 1.8% dividend yield and also has a low beta at 0.4. The company is a manufacturer of various household, personal care and specialty products, which include Arm & Hammer, Orajel and Trojan. Church & Dwight’s major segment is consumer domestic, making up nearly 75% of sales.
Back in 2012, Chruch snatched up Avid Health for $650 million. Avid is the leading gummy-form maker of vitamins and supplements, with major brands VITAFUSION and L’IL CRITTERS. Church & Dwight Co., Inc. (NYSE:CHD) CEO notes that..
“The acquisition of Avid’s gummy vitamins business represents a great addition to our existing portfolio and brings to our company a new growth platform in one of the fastest-growing segments of the attractive vitamin/mineral / supplement category. It is also consistent with our strategy of strengthening our business by adding [number-one] or [number-two] brands in areas of high-growth potential.”
Sales are expected to be up 12% in 2013, where the Avid Health deal is expected to be a key driver. Some 8% of the 2013 sales growth is expected to be driven by Avid.
Bottom line
The Clorox Company (NYSE:CLX) is trading at a steep discount to its major peers on a P/E basis…
Meanwhile, the cleaning-products company has the top dividend yield…
I think The Clorox Company (NYSE:CLX) is one of the most underrated plays in the consumer-products industry. It’s not only the cheapest and the best income play, but it also has solid growth opportunities in international markets.
Meanwhile, Colgate-Palmolive Company (NYSE:CL) is already operating abroad and provides investors with solid exposure to the emerging markets. I also like Church & Dwight Co., Inc. (NYSE:CHD)’s weighing toward the personal-care business and recent foray into the vitamin market. The case could be made that all three consumer products are buys.
Marshall Hargrave has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
The article This Stock Is Cleaning Up Nicely originally appeared on Fool.com.
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