The novel coronavirus breathed new life into some tried-and-true consumer staples that perhaps most people took for granted. Clorox (NYSE:CLX) stock is one name that’s been in the spotlight as of late.
Clorox, best known for its bleach and cleaning wipes, is one of the hottest companies today, as consumers try to keep their homes free of contamination. There are infinite websites devoted to telling shoppers where they can buy hard-to-find Clorox wipes, as the company tries to keep up with demand.
And Clorox stock responded as well, rising more than 17.3% year-to-date while the Dow Jones Industrial Average fell 22%. Clorox has been one of the few safe havens on Wall Street amid the market selloff. Trading volume rose from 500,000 daily shares in January to as much as 7 million shares daily in March.
Those are impressive numbers. But while it’s great to ride a popular stock now, it’s also important for a company to have strong fundamentals and show it’s able to sustain growth in the long term.
With that in mind, let’s take a look at Clorox stock.
Clorox Stock at a Glance
Clorox stock actually hit an all-time high in March, reaching close to $200 per share. It’s now resting near $180. But the volatility and volume of trading is sure to make CLX bounce around in the coming weeks.
Notably, CLX is trading about 6% over its 50-day moving average, and roughly 12% over its 200-day moving average.
But looking at the longer picture, CLX underperformed the Dow. It gained only 20% over the last five years, versus a 64% increase in the broader market.
In early February, CLX reported quarterly earnings of $1.46 per share, which beat analysts’ expectations of $1.31 per share.
As demand for Clorox cleaning products increased this spring, current-quarter estimates rose as well. EPS estimates for the second quarter have gone from $1.39 to $1.55, and full-year estimates increased from $6.19 per share to $6.38.
What’s the Long-Term Picture?
There’s no doubt that Clorox is riding the coronavirus pandemic to higher profits. But what happens when the virus begins to fade?
The year 2020 will always be remembered for this pandemic and how it changed our lives, and one of the ways that life will likely change for good — and for the better — is a much greater appreciation for disinfectants. The habits that people are building today in terms of public behavior will likely stay with consumers for the long haul.
And Clorox is a big player in that as its wipes and bleach have been approved by the Environmental Protection Agency as effective products against Covid-19. Clorox recently increased production and also created a new product supply team to keep up with its supply chain. Those efforts will weigh positively on CLX stock in the second half of 2020.
But it’s also important to remember that as much as people think and talk about Clorox for its disinfectant business, that’s only a small part of what CLX does.
In fact, disinfectants make up only about 25% of Clorox’s sales. Clorox also makes plenty of other things that you’ll find in your house every day, including Kingsford charcoal, Liquid-Plumr drain cleaner, Hidden Valley Ranch salad dressing, Fresh Step cat litter and Burt’s Bees lip products.
Clorox said sales in its lifestyle segment rose by 4% in the last quarter to $347 million.
The Bottom Line on Clorox Stock
As the coronavirus scare changes consumer behavior for months — or perhaps longer — Clorox is becoming an indispensable part of our lives. Coupled with its other common household products, that bodes well for CLX stock for a long time to come.
Clorox stock gets a well-deserved A rating in my Portfolio Grader. And as Clorox is a true dividend aristocrat, offering a 2.4% dividend that’s grown annually for the last 42 years, CLX also gets a B in my Dividend Grader as well.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.