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Why Colgate Stock Should Remain in Investors' Portfolio
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Colgate-Palmolive Company (CL - Free Report) is one stock that has been stable in the coronavirus period despite the turmoil in markets. In general, the consumer staples stocks, dealing in everyday essentials, have shown tranquility, thanks to the nature of business. Amid the pandemic, Colgate continued to witness strong volume growth and robust pricing, which aided its top line across most regions.
This helped the company deliver strong top and bottom-line results in first-quarter 2020. Further, it has been benefiting from innovation and in-store implementation, which have been the guiding principles of its growth strategy. Also, the company remains focused on expanding the availability of its products through enhanced distribution to newer markets and channels, which is likely to help improve its organic sales performance.
Driven by the recent trend and strong fundamentals, the Colgate stock has risen 7% year to date compared with the industry’s growth of 0.5%. Moreover, the Zacks Rank #3 (Hold) stock, with a long-term earnings growth rate of 5.6% and a VGM Score of B, is poised for more growth ahead.
Speaking of its expansion plans, the company is aggressively expanding into faster growth channels, while extending the geographic footprint of its brands. In 2019, the company expanded its portfolio by introducing pharmacy brands like elmex and meridol to newer markets. Moreover, it remains impressed with the performance of professional skincare businesses — Elta MD and PCA Skin — in spas and dermatologists. Further, the company expanded its premium skincare portfolio with the buyout of the Filorga skincare business. It is also on track to expand its oral care portfolio as evident from the acquisition of Hello Products.
Additionally, the company is keen on expanding the availability of its products through the e-commerce channel. It increased its focus on the platform as more consumers are using online services for essential needs, given the COVID-19 outbreak. This helped the e-commerce business to grow more than 50% in the first quarter. We note that the company has been expanding the availability of its products through the e-commerce offerings with the launch of Hill’s to home, which enables pet parents to purchase prescription diet products directly from their veterinarian with home delivery option. All these actions are likely to fuel sales.
Colgate’s innovation strategy has been focused on growing in adjacent categories and product segments. The company is on track to expand its oral care portfolio as evident from the buyout of Hello Products, a leading oral care brand in the United States that produces eco-friendly and organic products. The brand’s products, which have a distinct position in the market, are extremely popular with young consumers and the across the broader segment. Further, the brand fully complements the company’s Tom’s of Maine and Colgate brands.
Also, its innovation efforts are highlighted by the relaunch of Colgate Total and Hill’s Science Diet as well as the continued expansion of the Naturals and Therapeutics divisions. This along with accelerated investments in brands and higher pricing is likely to aid the top line. Moreover, it continues to expand the Naturals toothpaste and prescription diet. In fact, the Naturals range is a key area of focus for the company in personal and home care categories.
However, management pulled 2020 view, citing unprecedented impacts of the coronavirus outbreak. Apart from this, deleverage in advertising and SG&A expenses and adverse currency fluctuations remain concerning . 3 Strong Consumer Staples Stocks Amid Pandemic
Clorox remained strong-footed as its disinfectant wipes, sprays, bleach, floor cleaners and other products remained in great demand during the coronavirus pandemic. Its products flew off the store shelves due to increased demand from consumers, healthcare professionals and others to clean surfaces as often as possible.
Church & Dwight benefited from strong performance in both household and personal care businesses, with consumers’ shifting preference for essential products. It witnessed significant increase in demand for its products, especially household cleaning products as consumers are focusing on increased cleanliness. Further, e-commerce sales played a strong role, with more consumers buying online.
Meanwhile, Procter & Gamble benefited from its efforts to make its cleaning and personal care products available in recent months despite the lockdowns, which helped it to bolster sales. Moreover, the company witnessed an increased demand for hand soaps, detergents and surface cleaning products during the pandemic.
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This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
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Why Colgate Stock Should Remain in Investors' Portfolio
Colgate-Palmolive Company (CL - Free Report) is one stock that has been stable in the coronavirus period despite the turmoil in markets. In general, the consumer staples stocks, dealing in everyday essentials, have shown tranquility, thanks to the nature of business. Amid the pandemic, Colgate continued to witness strong volume growth and robust pricing, which aided its top line across most regions.
This helped the company deliver strong top and bottom-line results in first-quarter 2020. Further, it has been benefiting from innovation and in-store implementation, which have been the guiding principles of its growth strategy. Also, the company remains focused on expanding the availability of its products through enhanced distribution to newer markets and channels, which is likely to help improve its organic sales performance.
Driven by the recent trend and strong fundamentals, the Colgate stock has risen 7% year to date compared with the industry’s growth of 0.5%. Moreover, the Zacks Rank #3 (Hold) stock, with a long-term earnings growth rate of 5.6% and a VGM Score of B, is poised for more growth ahead.
Speaking of its expansion plans, the company is aggressively expanding into faster growth channels, while extending the geographic footprint of its brands. In 2019, the company expanded its portfolio by introducing pharmacy brands like elmex and meridol to newer markets. Moreover, it remains impressed with the performance of professional skincare businesses — Elta MD and PCA Skin — in spas and dermatologists. Further, the company expanded its premium skincare portfolio with the buyout of the Filorga skincare business. It is also on track to expand its oral care portfolio as evident from the acquisition of Hello Products.
Additionally, the company is keen on expanding the availability of its products through the e-commerce channel. It increased its focus on the platform as more consumers are using online services for essential needs, given the COVID-19 outbreak. This helped the e-commerce business to grow more than 50% in the first quarter. We note that the company has been expanding the availability of its products through the e-commerce offerings with the launch of Hill’s to home, which enables pet parents to purchase prescription diet products directly from their veterinarian with home delivery option. All these actions are likely to fuel sales.
Colgate’s innovation strategy has been focused on growing in adjacent categories and product segments. The company is on track to expand its oral care portfolio as evident from the buyout of Hello Products, a leading oral care brand in the United States that produces eco-friendly and organic products. The brand’s products, which have a distinct position in the market, are extremely popular with young consumers and the across the broader segment. Further, the brand fully complements the company’s Tom’s of Maine and Colgate brands.
Also, its innovation efforts are highlighted by the relaunch of Colgate Total and Hill’s Science Diet as well as the continued expansion of the Naturals and Therapeutics divisions. This along with accelerated investments in brands and higher pricing is likely to aid the top line. Moreover, it continues to expand the Naturals toothpaste and prescription diet. In fact, the Naturals range is a key area of focus for the company in personal and home care categories.
However, management pulled 2020 view, citing unprecedented impacts of the coronavirus outbreak. Apart from this, deleverage in advertising and SG&A expenses and adverse currency fluctuations remain concerning
.
3 Strong Consumer Staples Stocks Amid Pandemic
Some Consumer Staples companies, which displayed immense strength amid the coronavirus outbreak-led volatility, are Clorox (CLX - Free Report) , Procter & Gamble (PG - Free Report) and Church & Dwight (CHD - Free Report) . All three companies currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Clorox remained strong-footed as its disinfectant wipes, sprays, bleach, floor cleaners and other products remained in great demand during the coronavirus pandemic. Its products flew off the store shelves due to increased demand from consumers, healthcare professionals and others to clean surfaces as often as possible.
Church & Dwight benefited from strong performance in both household and personal care businesses, with consumers’ shifting preference for essential products. It witnessed significant increase in demand for its products, especially household cleaning products as consumers are focusing on increased cleanliness. Further, e-commerce sales played a strong role, with more consumers buying online.
Meanwhile, Procter & Gamble benefited from its efforts to make its cleaning and personal care products available in recent months despite the lockdowns, which helped it to bolster sales. Moreover, the company witnessed an increased demand for hand soaps, detergents and surface cleaning products during the pandemic.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>