The Female Health Company (FHCO), Church & Dwight Co., Inc. (CHD): Two Condom Stocks for Health and Profit

Church & Dwight Co., Inc. (NYSE:CHD)’s Trojan dominates the US market, but Reckitt Benckiser Group Plc (LON:RB) of Slough, UK, is trying to capture a larger share of the US condom market with its Durex brand. Durex lined up celebrities Jenny McCarthy and Joanna Krupa for a Durex condom bash in New York earlier this year, and has developed smart print ads to promote its Durex condoms. Durex is the dominant brand in the United Kingdom, but it only has 15% of the US condom market, compared with Trojan’s 69%. It’s unlikely Durex will take over as the dominant brand in the United States, but it may gain some market share. Reckitt Benckiser is a large diversified company selling other nondurable household products as well, including the popular disinfectant cleaner Lysol.

Other considerations

Other reasons to like Church & Dwight Co., Inc. (NYSE:CHD) and The Female Health Company (NASDAQ:FHCO)are their high profit margins. Church & Dwight has an operating profit margin of 19% and a net profit of 12%. The margins at Female Health Company are even better, with an operating profit margin of 34.12% and a net profit margin of 46.79%. Reckitt Benckiser’s operating margin was 25.34%.

A risk facing Female Health lies in competitors trying to come up with other female condoms. Female Health is partly dependent on world health organizations buying its products to deliver them free to women in Third World countries. As education and awareness grow over time, however, more women will buy these products under their own volition to protect themselves against disease and unwanted pregnancy.

The Foolish bottom line

Worldwide condom sales are forecast to reach $5.4 billion by 2018. Both The Female Health Company (NASDAQ:FHCO) and Church & Dwight Co., Inc. (NYSE:CHD) are poised to grow their businesses in this time as more people decide to protect themselves against disease and unintended pregnancy while still enjoying sex. Both stocks offer long-term appreciation and dividends as well.

The article Two Condom Stocks for Health and Profit originally appeared on Fool.com and is written by Michael Hooper.

Michael Hooper owns shares of Church & Dwight Co., Inc. (NYSE:CHD).. The Motley Fool recommends Reckitt Benckiser Group. Michael is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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