Stock Spotlight: Colgate Palmolive
Whether the markets are rising or falling, stocks that are more likely than
the average stock to be higher in a year’s time should always attract investor
attention.
And this is all the more so when that stock is a part of an industry group
that is expected to outperform all other industry groups going forward.
That industry group, by the way, is Personal Products, with a PowerRating of
10–the highest possible grade in our PowerRatings. And that stock is 9-rated
Colgate Palmolive [CL@CL]: our Featured Stock Spotlight stock of the week.
Before looking more specifically at Colgate Palmolive, let’s understand more
the industry from which the stock comes. As I mentioned at the outset, the
Personal Products industry–with its 10 PowerRating–should perform as well or
better than all other industries in the market. Our research into industry group
behavior since 1995 tells us that industries that have PowerRatings of 10 have
produced average annualized returns of more than 35%. Compare this to the
performance of the average industry, which has earned average annualized returns
of approximately 14.61% over the same time period.
Other stocks in this industry include such well-known companies as Procter
& Gamble [PG@PG], Kimberly Clark Corp. [KMB@KMB], Estee Lauder
Companies [EL@EL], and Avon Products [AVP@AVP]. Estee Lauder and Avon
both have just-above-average PowerRatings of 7, while Kimberly Clark has earned
a PowerRating of 8. Procter & Gamble shares a 9 PowerRating with our featured
stock, Colgate Palmolive.
Stocks with a PowerRating of 9 are among the best stocks for investors
looking to add quality names to their stock portfolios. Based on our research,
going back to 1995, 9-rated stocks have been both more reliable and better
performers than the average stock.
Consider this: looking at thousands and thousands of simulated trades over
the past 12 years, we found that stocks with PowerRatings of 9 were higher one
year later more than 79% of the time. This is a testament to the reliability of
high PowerRatings stocks. By contrast, the average stock–a stock with a
PowerRating of 5, 6, or 7–was higher one year later less than 68% of the time.
And not only are high PowerRatings stocks more reliable than the average
stock in terms of being higher after one year, but also high PowerRatings stocks
have tended to dramatically outperform the average stock, as well. Based on our
research, 9-rated stocks have tended to average more than 18% in a year’s time.
The average stock, by comparison, has averaged 12-13%.
Colgate Palmolive has a broad product line in personal care products beyond
the toothpaste and dishwashing products for which the company is perhaps best
well-known. This includes products in categories such as bar soaps and body
washes, household cleaners and fabric softeners, anti-perspirant/deodorant and
liquid hand soap. The company also makes and markets the popular Hill’s brand of
pet food for dogs and cats.
Colgate Palmolive has been one of a number of American companies tht have
benefitted greatly from overseas sales. In the third quarter, Colgate saw its
sales in Latin America grow by 16%. In the Asia-Africa region, sales were up by
19%. Compare this to same-quarter sales growth in North America of 3%.
Colgate Palmolive is currently trading in the middle of its 52-week price
range of $81.98 to $63.75. The stock has a P/E of just under 24.
