With billions across the globe hunkered down to wait out the COVID-19 pandemic, millions of families are harkening to their grandmothers’ advice to put down the remote and pick up the broom. The Clorox Company (CLX), the Fortune 500 home-goods manufacturer based in Oakland, CA is happy to sell them that broom, and a box of Clorox Wipes while they’re at it. Although Clorox stock traded mostly sideways between mid-2015 and mid-2018, the stock has increased over 50% since January 2019 as the globe has entered an era of ubiquitous stay-at-home orders, remote office work, and intentional sanitization. These developments have had a significant positive impact on Clorox’s business and the likelihood of a permanent increase in demand for cleaning products has carried CLX to new highs.
Historical Growth & Consistency
Clorox, which manufactures and markets both consumer and professional products, provides a diverse set of products across markets, including charcoal, cat litter, plastic bags, cleaning supplies, water-filtration systems, dietary products, and cosmetics. The company was founded in 1913 as the first commercial-scale liquid bleach company in the United States and has grown steadily over 100 years since, producing consistent, long-term returns for investors since it originally began trading on public markets in 1928.
Beginning in the 1970’s Clorox began an aggressive acquisition-based expansion program and has continued to diversify and expand its portfolio of brands, which now includes Brita, Formula 409, Bert’s Bees, Pin-Sol, Hidden Valley Ranch, Glad, and Kingsford Charcoal, among others. As Clorox has continued to add to the scope of its sales and distribution network, it has also stayed abreast of generational trends, becoming the first major consumer goods organization to develop and market an environmentally-friendly line of cleaning products in 2008 (Green Works). In the modern era, given the consistent nature of the home and consumer goods market, Clorox has been a profitable investment for investors seeking consistent returns and a degree of protection from poor economic climates, outpacing the S&P 500 Index over the 20 years since 2000.
CLX Stock Ratings
In addition to providing investors with a degree of protection against economic downturns via exposure to the consistent home goods industry, Clorox receives strong ratings in Growth, Momentum, and Scalability through EEON’s proprietary analysis. Clorox is also extraordinarily profitable, recording 14.8% return on assets and 125% return on equity over trailing 12-month period, which combined with a strong 13.2% profit margin, earn Clorox the #81 ranking on EEON’s list of 100 most profitable securities
Annually, Clorox most recently recorded 14.9% in YoY revenue growth, beating out competitors like Proctor & Gamble (PG), Colgate-Palmolive (CL), and Church & Dwight (CHD). Similarly, growth in Clorox’s stock price has kept pace with competitors and gained a tremendous amount of momentum since late 2019, growing 42% over the last 6 months alone. From a value perspective, Clorox and its competitors generally receive poor value rankings due to high “Price to Sales” and “Price to Book” ratios, which reflect the significant amount of manufacturing capital required to produce consumer goods on a global scale. Likewise, Clorox’s low “Safety” score is in line with its direct competitors and reflects its low degree of correlation with the overall market.
In an era where sanitization is a heightened priority and more and more individuals are spending time at home, investors may be interested in exploring Clorox and the broader consumer and home goods sector as a method for generating returns while shielding investments from the full force of market fluctuations.