U.S. markets closed

Why Clorox (CLX) Stock is a Long-Term Buy Far Beyond the Coronavirus

Benjamin Rains

The Clorox Company CLX sells disinfectant products that kill germs at home and in healthcare settings, which makes it almost tailor-made for the coronavirus economy. CLX stock has climbed in 2020, as the broader market tumbled. Better still, Clorox’s portfolio is far more diverse and it appears to be a solid longer-term buy right now.

Bleach & Beyond

Clorox’s portfolio includes its namesake disinfectant wipes and other offerings geared for household cleaning. The company also boasts products made specifically for the healthcare industry, which includes Clorox Healthcare Bleach. In fact, the company has blog posts about how it aims to help in the battle against superbugs and how it tests disinfectants to the highest standards.

CLX boasts a long list of household and industrial-level cleaners that are currently being used around the U.S. to help combat the ongoing spread of the novel coronavirus. On top of that, the firm’s portfolio includes everything from Kingsford charcoal and Brita water filters to Hidden Valley Ranch and Burt's Bees.

Better still, over 80% of Clorox’s sales are “generated from brands that hold the No. 1 or No. 2 market share positions in their categories.”

Overall, Clorox operates a recession-proof style portfolio, with cleaning making up around 35% of sales. Meanwhile, its household unit, which includes trash bags, cat litter, and more, accounts for 30%. And its lifestyle and international segments make up 20% and 16%, respectively. 





Other Fundamentals

The nearby chart helps investors see that CLX shares have outpaced their peers over the last five years, up 58%, against its industry’s 27% average. This outperformance trend looks even better over the past decade, with Clorox shares up 170% to crush its industry’s 90% average—which includes Unilever NV UN, Procter & Gamble PG, Colgate-Palmolive CL—and tops the S&P 500’s 123%.

CLX stock has popped 13% in 2020. Luckily for most long-term investors, the stock has cooled off from a massive one-week run in the middle of March. CLX’s valuation picture is a bit stretched, but it rests below its 12-month highs and is trading close to its five-year median of 23.7X forward 12-months Zacks earnings estimates.

Despite its climb, CLX’s dividend yield comes in at 2.45% right now. This helps its blow away the 10-year U.S. Treasury note’s 0.67%, the S&P 500’s 2.25% average, and its industry’s 2.33%.





Bottom Line

Clorox topped our Q2 fiscal 2020 earnings and revenue estimates in early February. The company’s earnings revisions have climbed since then to help CLX earn a Zacks Rank #1 (Strong Buy) right now, alongside an “A” grade for Momentum in our Style Scores system.

Clearly, Clorox stock appears to be worth considering in order to combat the current coronavirus economic downturn that has seen giants such as Nike NKE, Apple AAPL, Starbucks SBUX, and many others close some stores and or limit operations.

Clorox’s disinfectants, meanwhile, are likely flying off shelves. Therefore, it might be time to buy CLX for this economic setback and far beyond, given its expansive portfolio of everyday household items that are quintessential consumer staples.

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
NIKE, Inc. (NKE) : Free Stock Analysis Report
Colgate-Palmolive Company (CL) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
Starbucks Corporation (SBUX) : Free Stock Analysis Report
Procter & Gamble Company (The) (PG) : Free Stock Analysis Report
The Clorox Company (CLX) : Free Stock Analysis Report
Unilever NV (UN) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research