Consumer Sector Ideas

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>>> The Coca-Cola Company (NYSE:KO)

https://www.insidermonkey.com/blog/5-best-stocks-to-buy-right-now-according-to-financial-media-1270874/2/

Number of Hedge Fund Holders: 62

Number of Times Stock Appeared in Top Picks of Financial Media: 4

The Coca-Cola Company (NYSE:KO) is a beverage company that manufactures, markets, and sells various non-alcoholic beverages worldwide. On March 7, investment advisory Argus maintained a Buy rating on The Coca-Cola Company (NYSE:KO) stock and raised the price target to $70 from $67.

Among the hedge funds being tracked by Insider Monkey, Omaha, Nebraska-based firm Berkshire Hathaway is a leading shareholder in The Coca-Cola Company (NYSE:KO) with 400 million shares worth more than $23 billion.

In its Q3 2023 investor letter, Hayden Capital, an asset management firm, highlighted a few stocks and The Coca-Cola Company (NYSE:KO) was one of them. Here is what the fund said:

“It’s not just emerging markets either, where one could argue a “scarcity premium” given fewer quality public companies. Even in the US, The Coca-Cola Company (NYSE:KO) trades at ~30x P/E despite having the same earnings as 10 years ago.

Both of these companies actually have lower revenues than 10 – 15 years ago too, indicating that their profit growth is mostly from margin expansion. This can only last for so long before there’s no more excess expenses left to cut.

I find it ironic that all these companies trade as “bond-equivalents” in the minds of investors – even commanding lower yields than US treasuries, the safest security in the world. But it’s clear that their businesses are not nearly as safe. Coca-Cola is facing disruption risk from consumers shifting to new, heathier beverage brands.

But these companies are ~35% more expensive than US Treasuries, despite the heightened risk. On a risk-adjusted basis, one could argue the implied premium is even higher.”

Perhaps the explanation is simply the price volatility difference between these stocks and treasuries over the last two years. For example, 10-year Treasury bonds are down ~-20% since the beginning of 2022. By comparison, KO and PG are remarkably down only -4 – 6% over that time frame.”

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>>> McDonald's Corporation (NYSE:MCD) -- 14-day RSI: 35.50

https://finance.yahoo.com/news/11-oversold-blue-chip-stocks-195219274.html

Number of Hedge Fund Holders: 63

Chicago, Illinois-based McDonald's Corporation (NYSE:MCD) is the biggest fast-food restaurant chain operator worldwide. It began with a single drive-in restaurant in San Bernardino, California in 1955 and has since grown to nearly 40,000 locations across more than 100 countries globally and serves more than 60 million customers annually.

On February 5, McDonald’s Corporation (NYSE:MCD) released its financial results for Q4 2023. Its revenue increased by 8% y-o-y to $6.4 billion while it generated a net income of $2.04 billion. Its normalized EPS of $2.95 surpassed consensus estimates by $0.12.

As of Q4 2023, McDonald’s Corporation (NYSE:MCD) shares were owned by 63 of the 933 hedge funds tracked by Insider Monkey, for a total value of $2.1 billion. Ken Griffin’s Citadel Investment Group was the largest shareholder with ownership of 1.8 million shares valued at $533 million.

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Altria Group - >>> Forget Buying a Rental Property: Investing $50,000 in These Ultra-High Dividend Yield Stocks Could Make You $4,500 in Passive Income


by Brett Schafer

Motley Fool

March 24, 2024


https://finance.yahoo.com/news/forget-buying-rental-property-investing-101500391.html


The internet is awash with claims that the secret to financial independence is buying real estate and renting it out as "passive" income. The problem with real estate investing is that it is not as passive as the internet claims. Maintaining a rental property requires work, as landlords must manage tenants, fix damage, and continuously search for occupants.

There are better ways to generate passive income with your savings. Enter dividend stocks. These are stocks that regularly give shareholders cash payments in the form of dividends. And the best part is, it is actually passive income, requiring zero work on your part. All you have to do is click the buy button, hold on to your shares, and, like magic, you have a new income stream.

Forget buying a rental property. With $50,000, you can buy these two stocks and get approximately $4,500 each year in passive income.

1. Altria Group: Price increases and selling minority stakes

Our first stock is Altria Group (NYSE: MO). This is a tobacco stock that sells Marlboro cigarettes (and others) in the United States, which is the largest driver of profits for shareholders. On top of cigarettes, the company owns cigar brands, nicotine pouches, and a vaping business, although they are much smaller than cigarettes today.

Cigarette volumes have been declining in the United States for the last few decades. This is good for society, but bad for a company like Altria. So what are they to do? Raise prices, of course. Altria has been able to raise the price of cigarette packs for many years to counteract volume declines. This has led to consistent growth in operating income and cash flow, which is what fuels its large dividend payout.

Altria Group owns a large stake in Anheuser Busch, the global beer company. It has started to sell off part of this stake in order to fuel share buybacks, which decrease Altria's outstanding shares. Why is this important for dividend investors? If Altria has fewer shares outstanding, it can raise its dividend payout per share while still paying the same nominal dividend each year. If the dividend per share gets raised, your passive income gets raised as well.

As of this writing, Altria stock has a dividend yield of 8.58%. That means if you use $25,000 -- half of the theoretical $50,000 pile -- to buy shares of the stock, the company will pay you $2,145 each year in dividend income. This is a dividend that has grown by 100% in the last 10 years. You can benefit without putting in any work yourself.


2. British American Tobacco: betting on a new generation

The second stock in this pairing is British American Tobacco (NYSE: BTI). Like Altria, it is one of the world's largest tobacco companies, and it has counteracted volume declines for years by consistently raising prices. It owns brands including Camel, Newport, and Lucky Strike and sells products in many countries around the world.

However, unlike Altria, British American Tobacco's non-cigarette business units are a sizable portion of its operations. These "new categories" (as the company calls them) generated $4.2 billion in revenue last year and are growing rather quickly. These are nicotine products, such as nicotine pouches or e-vapor. These brands have collectively turned a profit and should help the company further counteract volume declines with cigarettes.

British American Tobacco's dividend yield is 9.37%, slightly higher than Altria's. A $25,000 investment into shares of the stock will give you an annual dividend income of $2,342.50. With the continued growth of the new categories segment, I would expect the company's dividend per share to grow this decade as well.

Add it all together, and a $50,000 investment into these two nicotine conglomerates can generate approximately $4,500 in passive income in the form of dividends each year for investors. That's at current share prices, of course. These investments require almost zero work to maintain as a shareholder, which contrasts drastically with the work that needs to be done to maintain rental properties.

Real estate can be a great investment for some people. But for those looking to build truly passive income, you might want to look at buying dividend stocks with your hard-earned savings instead.

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>>> Wingstop Inc. (WING), together with its subsidiaries, franchises and operates restaurants under the Wingstop brand. Its restaurants offer classic wings, boneless wings, tenders, and hand-sauced-and-tossed in various flavors, as well as chicken sandwiches with fries and hand-cut carrots and celery that are cooked-to-order. The company was founded in 1994 and is headquartered in Addison, Texas.

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>>> Chipotle (NYSE:CMG) has been a top-performing stock as more consumers look for healthier alternatives. The company is in expansion mode as it aims to open 285-315 new restaurants in 2024. The midpoint of 300 new restaurants is a notable increase from the 271 restaurants Chipotle opened in 2023.

https://finance.yahoo.com/news/market-mavericks-7-growth-stocks-154037454.html

The company has the financial strength to gain more market share. Chipotle increased its revenue by 15.4% year-over-year while delivering a 26.1% year-over-year boost in net income. The company now has a net profit margin in the double digits.

Chipotle has been rapidly gaining market share in the fast food industry, and its stock price has followed suit. Shares are up by 78% over the past year and have registered a 335% gain over the past five years. Those stock gains outperform most of the Magnificent Seven growth stocks.

Demand for Chipotle’s food has only strengthened. Expanding its horizons and starting up additional restaurants will help the company reward long-term investors.

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Procter + Gamble, J+J - >>> Warren Buffett Dumped These 2 Top Dividend Stocks. Should You Follow His Lead?


by Cory Renauer

The Motley Fool

December 28, 2023


https://finance.yahoo.com/news/warren-buffett-dumped-2-top-103900862.html


If you want to develop a skill like investing, it's usually a good idea to follow in the footsteps of folks who already know what they're doing. With a successful track record that spans nearly six decades, it's hard to find a better role model to emulate than Warren Buffett.

Buffett acquired Berkshire Hathaway for $14.86 per share in 1965, and since then shares of the holding company have increased by an average rate of 19.8% annually. Some money managers have outperformed Buffett over shorter time frames but nobody has been able to put up these kinds of numbers decade after decade.

Noticing his decades of success, many everyday investors are eager to know what he's buying and selling. According to disclosures that all large money managers must make to the U.S. Securities and Exchange Commission, we can see that Buffett completely closed out positions in Johnson & Johnson (NYSE: JNJ) and Proctor & Gamble (NYSE: PG) during the third quarter.

Both companies attract income-seeking investors with their legendary dividend programs. Let's look at the road ahead to see if dropping these stocks from your portfolio the way Buffett did makes sense right now.

Johnson & Johnson

Buffett closed out seven positions in the third quarter, and one of the most surprising was Johnson & Johnson. The healthcare conglomerate's dividend program is legendary with 61 consecutive years of annual dividend raises. At recent prices, it offers a 3% yield.

Despite a record of consistent dividend raises, Berkshire closed its J&J position in the third quarter by selling 327,100 shares. Buffett hasn't explained why, but I'd wager the recent spinoff of Kenvue was the deal breaker.

Kenvue was formed from J&J's old consumer goods segment. This August, J&J finalized Kenvue's separation and I wouldn't be surprised if Berkshire dropped its shares shortly after. Now that it no longer sells well-recognized brands like Listerine, Tylenol, and Band-Aid, an investment in this stock relies more heavily on its pharmaceutical and medical technology segments.

Buffett and Berkshire famously avoid investing in companies they don't understand well. There are a lot of ins and outs when it comes to medical technology, and the biopharmaceutical industry can be even more complicated. With this in mind, I wouldn't consider Berkshire's exit as a sign of a deeper problem at J&J.

If we ignore the effects of currency exchange, medtech sales jumped 10.4% year over year. Pharmaceuticals, which make up 65% of total revenue, had a rough quarter due to rapidly declining COVID-19 sales. Despite the challenge, J&J reported pharma sales that grew 4.4% year over year.

J&J recently submitted applications seeking approval for an experimental lung cancer therapy called lazertinib that could push pharma sales much higher in 2024. In a pivotal trial, patients treated with lazertinib in combination with Rybrevant, another J&J drug, were significantly less likely to experience disease progression compared to treatment with Tagrisso.

With $5.9 billion in annualized sales, Tagrisso is AstraZeneca's top-selling drug at the moment. Investors holding shares of J&J probably want to hold on at least long enough to see if lazertinib plus Rybrevant can take Tagrisso's place.

Proctor & Gamble

In the third quarter, Berkshire sold 315,400 Proctor & Gamble shares to close its position in the legendary consumer goods company. The sale was surprising because this company's dividend track record is even longer than J&J's.

Proctor & Gamble has paid a dividend every year since 1890, and this April it announced its 67th consecutive annual payout increase. At recent prices, it offers a 2.6% yield. This might not inspire anyone to buy the stock now but I wouldn't be in a hurry to let go either.

Proctor & Gamble recorded a very healthy $14.6 billion in free cash flow over the past year. It needed 62% of this sum to meet its dividend commitment. In other words, profits are more than sufficient to service its debt load and support future dividend raises in line with the company's overall growth rate.

Proctor & Gamble probably isn't going to be your portfolio's top performer, but steady gains seem likely. With a lineup of well-established brands that include Crest, Tide, and Pampers, the company was able to raise prices by 7% during its fiscal first quarter ended on Sept. 30. Sales volume over the same time frame came in just 1% lower.

Proctor & Gamble's brands gave the company enough pricing power to raise its dividend payout by 31% over the past five years. That isn't too bad, but rising interest expenses could make the next five years of dividend growth even less exciting.

Older investors who can't afford losses or declining dividends will want to hold on to this stock. For investors with a higher tolerance for risk, though, following Buffett's lead is probably the right move.

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>>> Mondelez International, Inc. (MDLZ), through its subsidiaries, manufactures, markets, and sells snack food and beverage products in the Latin America, North America, Asia, the Middle East, Africa, and Europe. It provides biscuits and baked snacks, including cookies, crackers, salted snacks, snack bars, and cakes and pastries; chocolates; and gums and candies, as well as various cheese and grocery, and powdered beverage products. The company's brand portfolio includes Oreo, Ritz, LU, CLIF Bar, and Tate's Bake Shop biscuits and baked snacks, as well as Cadbury Dairy Milk, Milka, and Toblerone chocolate. It serves supermarket chains, wholesalers, supercenters, club stores, mass merchandisers, distributors, convenience stores, gasoline stations, drug stores, value stores, and other retail food outlets through direct store delivery, company-owned and satellite warehouses, third party distributors, and other facilities, as well as through independent sales offices and agents. The company was formerly known as Kraft Foods Inc. and changed its name to Mondelez International, Inc. in October 2012. Mondelez International, Inc. was incorporated in 2000 and is headquartered in Chicago, Illinois.

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>>> Kroger to pay $68 million to settle West Virginia opioid claims


Reuters

by By Brendan Pierson

5-4-23


https://www.msn.com/en-us/money/topstories/kroger-to-pay-68-million-to-settle-west-virginia-opioid-claims/ar-AA1aKh08?OCID=ansmsnnews11


(Reuters) -The Kroger Co has agreed to pay West Virginia $68 million to settle claims that it fueled the opioid epidemic through lax oversight of its pill sales, bringing the state's years-long litigation over the opioid crisis to a close.

The deal, announced Thursday by West Virginia Attorney General Patrick Morrisey, comes a month before the grocery store had been set to go to trial against the state. All other companies sued by the state over opioids had already settled.

"This is an important day for West Virginia," Morrisey said. "This is a day of healing."

Morrisey also touted the state's framework for spending the funds on fighting the opioid epidemic, in which 72.5 percent will go to a newly created foundation, overseen by a board chosen by the governor and by local governments. Most of the remainder will go to local governments.

He said the framework would ensure that the money is spent well and does not disappear into a "black hole."

A Kroger spokesperson said in an email that the company believes the lawsuit is without merit, but that the settlement was the "best path forward to resolve this litigation."

West Virginia, which has opted out of nationwide opioid settlements totaling more than $50 billion in order to pursue cases on its own, has now secured approximately $1 billion from drugmakers, distributors and pharmacies, Morrisey said, a larger amount per capita than any other state.

West Virginia had the highest drug overdose death rate of any state in 2021, according to the U.S. Centers for Disease Control and Prevention.

Thousands of lawsuits have been filed by states, local governments and Native American tribes over opioids, accusing drug companies of downplaying opioids' risks and distributors and pharmacies of ignoring red flags that they were being trafficked illegally.

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>>> Yum! Brands Reports First-Quarter Results


Business Wire

May 3, 2023


https://finance.yahoo.com/news/yum-brands-reports-first-quarter-110000725.html


Broad-Based Global Strength Resulting in 13% System Sales Growth excluding Russia Impact;

8% Same-Store Sales Growth and Record Digital System Sales With Digital Mix Exceeding 45%


LOUISVILLE, Ky., May 03, 2023--(BUSINESS WIRE)--Yum! Brands, Inc. (NYSE: YUM) today reported results for the first-quarter ending March 31, 2023. Worldwide system sales excluding foreign currency translation grew 13% excluding Russia impact, with 8% same-store sales growth and 5% unit growth. First-quarter GAAP operating profit grew 3%. First-quarter core operating profit grew 11% including a 1 percentage point headwind from Russia. First-quarter GAAP EPS was $1.05 and first-quarter EPS excluding Special Items was $1.06. First-quarter EPS includes a negative $0.07 mark-to-market impact from unrealized investment losses and a negative $0.08 impact from foreign currency translation.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230502005939/en/

DAVID GIBBS COMMENTS

David Gibbs, CEO, said "Our first-quarter results continue to illustrate the power of our global portfolio and the advantages of our business model. The demand for our iconic brands is evident as our incredible teams and franchise partners delivered another strong quarter with system sales growth of 13% excluding Russia, driven by 8% same-store sales growth and continued development momentum. We're seeing broad-based accelerating digital sales growth leading to a record quarter for both digital system sales of nearly $7 billion and digital sales mix that exceeded 45%. I’m pleased to see the revenue flow through in the quarter translate to 11% core operating profit growth. We're proud of the strong start to the year and confident we'll continue to build on our position as the global franchisor of choice."

RUSSIA UPDATE

On April 17, 2023, Yum! Brands completed its exit from the Russian market by selling its KFC business in Russia to Smart Service Ltd., including all Russian KFC restaurants, operating system, master franchise rights and the trademark for the Rostik's brand. With the completion of the transaction, we have now ceased our corporate presence in Russia.

As of the beginning of the second quarter 2022, we elected to remove Russia from our unit count and system sales, negatively impacting those key performance metrics as presented in our FIRST-QUARTER HIGHLIGHTS section and the remainder of this release.

FIRST-QUARTER HIGHLIGHTS

Worldwide system sales grew 11%, excluding foreign currency translation, with KFC at 11%, Taco Bell at 12% and Pizza Hut 10%.

System sales growth figures exclude foreign currency translation ("F/X") and core operating profit growth figures exclude F/X and Special Items. Special Items are not allocated to any segment and therefore only impact worldwide GAAP results. See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further details.

Digital system sales includes all transactions where consumers at system restaurants utilize ordering interaction that is primarily facilitated by automated technology.

First-Quarter

Removing Russia from our first-quarter results negatively impacted KFC International system sales growth by 5 percentage points and KFC Division operating profit growth excluding foreign currency by 2 percentage points.

HABIT BURGER GRILL DIVISION

The Habit Burger Grill Division system sales grew 8% with flat same-store sales growth.

The Habit Burger Grill Division opened 11 gross new restaurants in the U.S. and Cambodia.

OTHER ITEMS

Disclosures pertaining to outstanding debt in our Restricted Group capital structure will be provided at the time of the filing of the first-quarter Form 10-Q.

Yum! Brands, Inc., based in Louisville, Kentucky, and its subsidiaries franchise or operate a system of over 55,000 restaurants in more than 155 countries and territories under the company’s concepts – KFC, Taco Bell, Pizza Hut and the Habit Burger Grill. The Company's KFC, Taco Bell and Pizza Hut brands are global leaders of the chicken, Mexican-style food, and pizza categories, respectively. The Habit Burger Grill is a fast casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more. In 2023, the KFC, Taco Bell and Pizza Hut brands were ranked in the top five of Entrepreneur’s Top Global Franchises Ranking. In addition, in 2023 Yum! Brands was included on the Bloomberg Gender-Equality Index; Forbes’ list of America’s Best Employers for Diversity; and Newsweek’s lists recognizing America’s Most Responsible Companies, America’s Greatest Workplaces for Diversity and America’s Greatest Workplaces for Women. In 2022, the Company was named to the Dow Jones Sustainability Index North America.

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>>> Clorox Reports Q3 Fiscal Year 2023 Results, Updates Outlook


PR Newswire

May 2, 2023


https://finance.yahoo.com/news/clorox-reports-q3-fiscal-2023-201000889.html


OAKLAND, Calif., May 2, 2023 /PRNewswire/ -- The Clorox Company (NYSE: CLX) today reported results for the third quarter of fiscal year 2023, which ended March 31, 2023.

Third-Quarter Fiscal Year 2023 Summary

Following is a summary of key third-quarter results. All comparisons are with the third quarter of fiscal year 2022 unless otherwise stated.

Net sales increased 6% to $1.91 billion compared to a 2% net sales increase in the year-ago quarter. The net sales increase was driven largely by favorable price mix, partially offset by lower volume. Organic sales1 were up 8%.

Gross margin increased 590 basis points to 41.8% from 35.9% in the year-ago quarter, due to the benefits of pricing and cost savings initiatives, partially offset by unfavorable commodity costs, and higher manufacturing and logistics expenses.

Diluted net earnings per share (diluted EPS) decreased 241% to a loss of $1.71 from $1.21 in the year-ago quarter. This decrease includes a noncash impairment charge of $445 million ($362 million after tax or $2.92) in the Vitamins, Minerals and Supplements business and continued investments in the company's long-term strategic digital capabilities and productivity enhancements (17 cents) as well as the implementation of the company's streamlined operating model (13 cents).

Adjusted EPS1 increased 15% to $1.51 from $1.31 in the year-ago quarter, due in part to the net benefits of pricing and cost savings, partially offset by higher selling and administrative expenses, advertising investments and unfavorable commodity costs.

Year-to-date net cash provided by operations was $728 million compared to $451 million in the year-ago period, representing a 61% increase.

"Our strong results this quarter reflect solid execution against our priorities to rebuild margin and drive top-line growth amid a challenging operating environment," said CEO Linda Rendle. "We continue to take a broad set of actions to address persistent cost inflation, including pricing and cost savings efforts. At the same time, we remain committed to investing in our advantaged portfolio of leading brands, innovation pipeline, digital transformation and streamlined operating model to create a stronger, more resilient company. These strategic choices, supported by the superior value our brands offer consumers and the steps we've taken to further position our business for long-term, profitable growth, are working as planned and support our decision to raise our fiscal year 2023 outlook."

This press release includes certain non-GAAP financial measures. See "Non-GAAP Financial Information" at the end of this press release for more details.

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1 Organic sales growth / (decrease), adjusted EPS and segment pretax earnings increase / (decrease) excluding the noncash impairment charge are non-GAAP measures. See Non-GAAP Financial Information at the end of this press release for reconciliations to the most comparable GAAP measures.

Strategic and Operational Highlights

The following are recent highlights of business and environmental, social and governance achievements:

Delivered organic sales growth in all four segments, supported by improved service levels, including the highest case fill rates since the start of the pandemic.

Achieved two consecutive quarters of gross margin expansion, supported by cost-justified pricing and decade-high cost savings.

Reduced inventory for the fifth quarter in a row, contributing to the 61% growth in cash from operations fiscal year to date.

Continued to implement the company's streamlined operating model, which is increasing efficiency and moving decision-making to those who are closer to consumers to better anticipate and meet their needs.

Ranked No. 1 on Barron's 2023 100 Most Sustainable U.S. Companies list.

Launched new product innovations through third-party partnerships in Burt's Bees and Glad that deliver improved sustainability benefits without sacrificing quality.

Expanded industry leadership in product transparency by listing ingredients on all Clorox SmartLabel cleaning product pages.

Key Segment Results

The following is a summary of key third-quarter results by reportable segment. All comparisons are with the third quarter of fiscal year 2022, unless otherwise stated.

Health and Wellness (Cleaning; Professional Products; Vitamins, Minerals and Supplements)

Net sales increased 7%, with 23 points of favorable price mix more than offsetting 16 points of lower volume.

Segment pretax earnings decreased 445%, primarily behind the noncash impairment charge in the VMS business, unfavorable commodity costs and advertising investments, partially offset by net sales growth primarily behind pricing as well as the benefit of cost savings. Excluding the noncash impairment charge, segment pretax earnings1 increased 70%.

Household (Bags and Wraps; Grilling; Cat Litter)

Net sales increased 2%, with 14 points of favorable price mix offsetting 12 points of lower volume.

Segment pretax earnings increased 8%, primarily due to higher net sales due to pricing and the benefit of cost savings, partially offset by advertising investments and unfavorable commodity costs.

Lifestyle (Food; Natural Personal Care; Water Filtration)

Net sales increased 15% behind favorable price mix.

Segment pretax earnings increased 26%, mainly due to higher net sales primarily behind pricing as well as the benefit of cost savings, partially offset by advertising investments and unfavorable commodity costs.

International (Sales Outside the U.S.)

Net sales increased 1%, with 21 points of favorable price mix more than offsetting 13 points of unfavorable foreign exchange rates and 7 points of lower volume. Organic sales1 growth was 14%.

Segment pretax earnings decreased 52% largely behind unfavorable foreign exchange rates, the noncash impairment charge in the VMS business, and higher manufacturing and logistics costs, partially offset by net sales growth primarily behind pricing as well as the benefit of cost savings. Excluding the noncash impairment charge, segment pretax earnings1 decreased 13%.

Fiscal Year 2023 Outlook

The company is updating the following elements of its fiscal year 2023 outlook:

Net sales are now expected to be between a 1% and 2% increase, compared previously to between a 2% decrease and 1% increase. Organic sales are now expected to be between a 3% and 4% increase, compared previously to between a flat and 3% increase.

Gross margin is now expected to increase between 250 and 300 basis points, primarily due to the combined benefit of pricing, cost savings and supply chain optimization, more than offsetting continued cost inflation. This compares previously to an increase of about 200 basis points.

Selling and administrative expenses are now expected to be about 16% of net sales, including about 1.5 points of impact from the company's strategic investments in digital capabilities and productivity enhancements. This compares previously to between 15% and 16% of net sales.

Effective tax rate is now expected to be about 37%, reflecting the impact from the impairment charge in the VMS business. This compares previously to about 24%. Excluding the impact from the VMS impairment charge, the adjusted effective tax rate is expected to be about 24%.

Diluted EPS is now expected to be between $0.45 and $0.60, or an 88% to 84% decrease, respectively. This compares previously to between $3.20 and $3.45, or a 14% to 8% decrease, respectively.

Adjusted EPS is now expected to be between $4.35 and $4.50, or a 6% to 10% increase, respectively. This compares previously to between $4.05 and $4.30, or a 1% decrease to a 5% increase, respectively. To provide greater visibility into the underlying operating performance of the business, adjusted EPS outlook excludes the noncash impairment charge of $2.92 related to the VMS business, the long-term strategic investment in digital capabilities and productivity enhancements, estimated to be about 63 cents, compared previously to approximately 55 cents, as well as the company's streamlined operating model, which is now estimated to be about 35 cents, compared previously to approximately 30 cents. While overall expectations for the streamlined operating model program remain unchanged, with $75 to $100 million in ongoing annual savings and $75 to $100 million in one-time costs over fiscal years 2023 and 2024, the timing of charges has been adjusted as plans continue to be refined. Savings for fiscal year 2023 are now expected to be about $35 million compared previously to approximately $25 million.

The company is confirming the following elements of its fiscal year 2023 outlook:

Foreign exchange headwinds continue to represent about a 2-point reduction in sales.

Advertising and sales promotion spending of about 10% of net sales, reflecting the company's ongoing commitment to invest in its brands.

About The Clorox Company

The Clorox Company (NYSE: CLX) champions people to be well and thrive every single day. Its trusted brands, which include Brita®, Burt's Bees®, Clorox®, Fresh Step®, Glad®, Hidden Valley®, Kingsford®, Liquid-Plumr®, Pine-Sol® and Rainbow Light®, can be found in about nine of 10 U.S. homes and internationally with brands such as Ajudin®, Clorinda®, Chux® and Poett®. Headquartered in Oakland, California, since 1913, Clorox was one of the first U.S. companies to integrate ESG into its business reporting, with commitments in three areas: Healthy Lives, Clean World and Thriving Communities. Visit thecloroxcompany.com to learn more.

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>>> Coca-Cola gets a lift from higher prices, steady demand


Reuters

April 24, 2023

By Ananya Mariam Rajesh


https://finance.yahoo.com/news/coca-cola-beats-quarterly-revenue-110206706.html


(Reuters) -Coca-Cola Co on Monday topped Wall Street estimates for first-quarter revenue and profit, benefiting from resilient demand for its sodas as well as multiple price increases undertaken to combat higher commodity and shipping costs.

The company said in February it would raise soda prices further in 2023 "across the world" but at a moderating pace, even as rival PepsiCo hit a pause on price hikes.

Average selling prices increased 11% in the first quarter, the maker of Fanta and Sprite said, while global unit case volumes rose 3%.

"The strength in case volume growth gives us confidence that sales momentum can continue as Coca-Cola's sales strategies are resonating with consumers," Edward Jones analyst Brittany Quatrochi said.

The company's shares were up about 1% in early trading.

Pepsi and Coca-Cola have faced little or no pushback from consumers to price increases thanks to their near-domination of the global carbonated drinks market.

Still, on an earnings call Coca-Cola CEO James Quincey said, "There is uncertainty on how the consumer environment may ultimately play out in 2023."

Quincey also said the recent banking crisis has fueled further uncertainty about purchasing behaviors in Europe, while consumption is still recovering to pre-pandemic levels in China after the lifting of curbs.

Meanwhile, first-quarter operating margin slipped to 30.7%, compared to 32.5% a year earlier, on higher operating costs, increased marketing spending, investments and a strong dollar.

On the call, executives said freight expenses as well as some commodities costs were moderating but prices for sweeteners and juices were trending higher.

"With pricing expected to moderate over the course of the year, this should come in tandem with moderating levels of commodity inflation, which should help to protect profitability," said Wedbush analyst Gerald Pascarelli.

Revenue rose 4.3% to $10.96 billion, beating estimates of $10.80 billion, according to Refinitiv data, while adjusted earnings of 68 cents per share topped expectations of 64 cents.

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>>> Procter & Gamble price hikes take sales from strength to strength


Reuters

Jessica DiNapoli and Ananya Mariam Rajesh

April 21, 2023


https://finance.yahoo.com/news/procter-gamble-raises-full-sales-110109041.html


(Reuters) -Procter & Gamble Co's customers continued to show little resistance to repeated price hikes, helping the Tide detergent maker boost its annual sales forecast and third-quarter margins.

The company also beat Wall Street targets for quarterly results and sweetened the pot for investors by raising the upper end of its 2023 share buyback target to between $7.4 billion and $8 billion, sending its shares up 2% in premarket trading.

The maker of Pampers diapers, Pantene shampoo and Oral-B toothpaste raised average prices across product categories by 10% during the quarter, and saw overall volumes fall just 3%.

Consumer goods makers, typically the last to see demand impacted by economic slowdowns, have hiked prices repeatedly to pass on steep input costs stemming from supply-chain snags and worsened by the Ukraine crisis.

P&G's gross margin rose by 150 basis points from a year ago, with a 470-basis point boost from the increased pricing.

But shrinking consumer wallets in the face of high inflation have fanned concerns of how much longer rising prices will be tolerated before triggering a switch to cheaper, private-label brands.

The decline in P&G's volumes sold is "obviously driven by pricing", said CFO Andre Schulten on a media call.

"We see consumers being a bit more careful with dosing and drawing down inventories over time."

The fabric and home-care unit, P&G's biggest segment, saw sales volumes fall 5%, with average price rising to 13%.

The company lowered its annual cost estimate related to commodity and freight expenses to about $3.5 billion from $3.7 billion, but Schulten said there is "no broad-based relief in input costs".

"Some (commodities) are down... Others are going up. Every highly energy intensive material, if you think about caustic soda or ammonium, it's actually increasing in pricing."

The company expects fiscal 2023 organic sales growth of about 6%, compared with its previous forecast for a 4% to 5% increase.

P&G maintained its annual earnings forecast of flat to a 4% rise.

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>>> Clorox (CLX) is cutting about 200 jobs as it aims to continue a reorganization effort launched last year. The cuts were announced in a blogpost by CEO Linda Rendle.


https://finance.yahoo.com/news/stocks-moving-in-after-hours-csx-clorox-first-financial-214814665.html


The maker of disinfectant wipes and trash bags saw its stock balloon during the pandemic amid lockdowns and consumers' heightened concern about germs.

Last September the company introduced a new operating model to make Clorox more "consumer obsessed" and leaner, according to the blogpost.

"While I’m energized about these changes and what they enable for us as an enterprise, we did have to make some difficult decisions today with the elimination of approximately 200 positions, or roughly 4% of our nonproduction workforce," wrote Rendle.

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Texas Roadhouse (TXRH) - >>> Don't Mess With This Texas Fast-Food Growth Stock After Sales Rise 100%


Investor's Business Daily

VIDYA RAMAKRISHNAN

04/13/2023


https://www.investors.com/research/growth-stock-txrh-doubled-its-revenue-in-less-than-five-years/?src=A00220


Restaurants have produced dozens of surprise winners over the decades, including Starbucks (SBUX) and Chipotle Mexican Grill (CMG). But it's gotten harder to uncover the best plays in this feast-or-famine market group. Enter growth stock Texas Roadhouse (TXRH), which is in a buy range after a breakout to all-time highs.

In January, TXRH shares rallied out of a flat base with a 101.85 entry in strong volume. Multiple tests of the 10-week line confirmed solid support as the stock headed up. The impressive Composite Rating of 96 signaled impressive strength while the 80 Relative Strength Rating met the requirement for growth stocks.

Growth Stock Revenue Doubles In Five Years

This fast-food growth stock has posted solid revenue growth over seven quarters. Sales have been on a tear, doubling to $4 billion in 2022, just five years after it hit the $2 billion mark.

Earnings have been in an uptrend in recent quarters as well, with Q4's profit of 89 cents per share up 17% year over year. The 55 cents per share dividend makes this issue even more attractive.

Higher sales offset lower margins in 2022, falling to 15.7% of sales due to inflation in both goods and wages. For 2023, the company expects further growth underpinned by higher menu prices.

Kentucky's Texas Roadhouse specializes in steaks, operating 697 owned and franchised restaurants across 49 states in the U.S. and 10 countries. This growth stock plans on expansion, buying up franchisees as company-owned stores are outperforming franchisees.

In 2022, it bought eight franchisees including key purchases in South Carolina and Georgia. The growth stock also benefits from its fast-casual chain Jaggers, which serves burgers, salads and shakes. and the Bubba 33 family restaurant chain.

Texas Roadhouse is in the Retail-Restaurants group, which holds 67th place among IBD's 197 industry groups.

Fund ownership stands at 61% of total outstanding shares.

Exchange traded funds own the stock as well with iShares Core S&P Mid-Cap (IJH) and the Vanguard Small Cap ETF (VB) hold positions.

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Coca-Cola - >>> At the other end of the pricing spectrum is Coca-Cola, which sells a wide range of beverages at low prices. Coca-Cola might initially seem like a shaky long-term investment because soda consumption rates are declining worldwide, but the company isn't a one-trick pony. It also sells brands of bottled water, tea, juice, sports drinks, energy drinks, coffee, and even alcoholic beverages.


https://www.fool.com/investing/2023/04/18/why-ferrari-hermes-and-coca-cola-are-no-brainer-bu/


Coca-Cola has also been constantly refreshing its flagship sodas with new flavors, healthier versions, and smaller serving sizes to attract new customers. As a result, its growth has remained remarkably consistent.

Its organic sales grew 16% in both 2021 and 2022 -- partly driven by the food-service industry's post-pandemic recovery -- and it expects 7% to 8% growth in 2023. The company expects its comparable EPS to grow 7% to 9% on a constant-currency basis in 2023 even as higher commodity costs squeeze its gross margins.

Coca-Cola's stock still looks reasonably valued at 24 times forward earnings, it pays a decent forward dividend yield of 2.9%, and it's a dependable Dividend King that has raised its payout annually for 61 consecutive years. So if you're looking for a no-brainer blue chip stock to simply buy and forget for a few decades, Coca-Cola easily fits the bill.

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Hermès - >>> Another iconic European luxury brand, Hermès, is a no-brainer buy right now. Just like Ferrari, Hermès doesn't need to worry about inflation and other macro headwinds because its core customers aren't much bothered by economic downturns. It can also easily afford to charge higher prices to offset its elevated supply chain costs.


https://www.fool.com/investing/2023/04/18/why-ferrari-hermes-and-coca-cola-are-no-brainer-bu/


Hermès differentiates itself from other top-tier luxury companies like LVMH (LVMUY) with two tactics.

First, it produces most of its products in France through a tight network of artisan workshops instead of outsourcing all of its production to overseas factories -- as LVMH does with most of its leading brands. That focus, which results in some items being crafted from start to finish by a single artisan, enables Hermès to sell its products at sky-high prices and gross margins.

Second, Hermès doesn't own a massive portfolio of secondary brands like LVMH does. It spends all of its cash cultivating the growth of its namesake brand, which prevents it from overdiversifying and diluting brand appeal.

This is a simple formula that generates consistent growth. Between 2017 and 2022, Hermès' revenue grew at a CAGR of 16%, its recurring operating margin expanded from 34.6% to 40.5%, and its net profit increased at a CAGR of 22%.

Analysts expect its revenue and net profit to grow 16% and 14%, respectively, in 2023. Its stock might seem pricey at 54 times this year's earnings, but it arguably deserves that high valuation.

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The Procter & Gamble Company (NYSE:PG) - >>> Number of Hedge Fund Holders: 74


https://www.insidermonkey.com/blog/5-best-beauty-stocks-to-buy-now-3-1137038/5/


The Procter & Gamble Company (NYSE:PG) is behind some of the most famous shampoos, waxing creams, hair care products, skincare products, grooming products and cosmetics worldwide.

There could be several reasons to add this top beauty stock to your portfolio in 2023, the chief being The Procter & Gamble Company (NYSE:PG)’s stellar dividend history. The Procter & Gamble Company (NYSE:PG) has upped its dividends for over six decades now.

The Procter & Gamble Company (NYSE:PG) is a highly popular stock among elite hedge funds tracked by Insider Monkey. 74 hedge funds tracked by Insider Monkey had stakes in The Procter & Gamble Company (NYSE:PG) at the end of the fourth quarter of 2022. The biggest stakeholder of The Procter & Gamble Company (NYSE:PG) was Bridgewater Associates of Ray Dalio which had a $757 million stake.

Rowan Street Capital made the following comment about The Procter & Gamble Company (NYSE:PG) in its Q4 2022 investor letter:

“Let’s look at The Procter & Gamble Company (NYSE:PG). Dividend yield is 2.4%. Earnings are forecasted to grow at 5.9%, and its current earnings multiple is at 25x. Now, lets say over the next 3-5 years the market loses interest in the “safe”, mature companies that grow at anemic rates and gets an appetite for growth again. It’s very unlikely that Mr. Market will be paying 25x for 5.9% earnings growth. Lets assume that multiple declines to the market average of 18x — that would be ~6.9% drag per year on the total expected return over next 3-5 years. If we get 2.4% (dividend) + 5.9% (earnings growth) – 6.9% (decrease in earnings multiple) = 1.4% (annual return we can expect on average from this stock).”

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>>> Yum! Brands, Inc. (NYSE:YUM) - Number of Hedge Fund Holders: 48

6-Month Performance as of March 30 (Relative to SPY): 8.41%


https://www.insidermonkey.com/blog/5-stocks-about-to-pop-according-to-jim-cramer-in-retrospect-1137168/4/


Another one of Cramer’s top restaurant stocks that were “about to pop” was Yum! Brands, Inc. (NYSE:YUM). He said that the company is well-run and is handling food inflation and wage pressures effectively. As of March 30, the stock has outperformed the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) by 8.41% over the past 6 months.

At the end of Q4 2022, 48 hedge funds were long Yum! Brands, Inc. (NYSE:YUM) and disclosed collective positions of $2.31 billion in the company. Of those, Citadel Investment Group was the top investor in the company and disclosed a position worth $404.9 million. <<<


>>> Yum! Brands, Inc., together with its subsidiaries, develops, operates, and franchises quick service restaurants worldwide. The company operates through four segments: the KFC Division, the Taco Bell Division, the Pizza Hut Division, and the Habit Burger Grill Division. It operates restaurants under the KFC, Pizza Hut, Taco Bell, and The Habit Burger Grill brands, which specialize in chicken, pizza, made-to-order chargrilled burgers, sandwiches, Mexican-style food categories, and other food products. The company was formerly known as TRICON Global Restaurants, Inc. and changed its name to Yum! Brands, Inc. in May 2002. Yum! Brands, Inc. was incorporated in 1997 and is headquartered in Louisville, Kentucky.

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>>> Clorox - After a major pullback from the latter half of 2020 through the middle of last year, shares of The Clorox Company (CLX 0.22%) are finally on the mend. The stock is up nearly 30% from 2022's low, and knocking on the door of new 52-week highs.


https://www.fool.com/investing/2023/03/24/these-3-dividend-payers-are-outpacing-the-sp-500/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


You know about the company's bleach and disinfectants using the same brand name. These cleaning products prompted the stock's huge run-up in early 2020. The world was looking for ways to protect itself from COVID-19 infections, making Clorox wipes a hot commodity. Once the initial dust settled, of course, the market realized it had pushed the stock far too high, and corrected the mistake over the next couple of years.

It's the Clorox you probably don't know, however, that makes this overly aggressive correction a prospective buying opportunity.

This company is also the name behind consumer goods ranging from Glad trash bags to Fresh Step kitty litter to Kingsford charcoal to Liquid-Plumr, and more. Clorox is now moving forward in a deliberate way with all of these brands, devoting its full attention to the so-called IGNITE growth strategy unveiled in late 2019 -- just before COVID-19 took hold in early 2020 and disrupted the initiative.

It's a slow-moving process. Analysts expect modest earnings growth on minimal revenue growth this year, and they are calling for per-share earnings to improve from $4.27 this year to $5.38 next year. Most of that improvement will likely stem from cost savings, though. Sales are only projected to grow about 3%, and it's still an expensive stock. It is progress, however, and the stock's budding rally says more and more investors are believing in the long-term potential of the IGNITE plan.

Perhaps more important to current and prospective shareholders is the fact that with next fiscal year's projected profits of $5.38 per share, the dividend is more than funded by earnings again. The Clorox Company's 20-year streak of dividend increases is still intact, with another one likely in the cards this year.

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McDonald's - >>> Fast food retailer McDonald's has the lowest yield on this list at 2.3%, but that's still better than the S&P 500. Plus, this is also a fairly strong and resilient business to invest in. Even though inflation has negatively affected many businesses, McDonald's has been able to adapt.


https://www.fool.com/investing/2023/03/01/want-to-collect-a-dividend-every-month-invest-in/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


For the last three months of 2022, the company's global comparable sales were up 12.6%, and in the U.S. they grew by 10.3%. The company says it has "benefited from strategic menu price increases" as consumers clearly have not ditched the restaurant chain despite higher prices. After all, McDonald's has fairly low-cost options for consumers, so increases there may be more modest than at more conventional restaurants. McDonald's earnings rose 16% during the period to over $1.9 billion.

McDonald's dividend looks as safe as ever. Like Medtronic, it has increased its payouts for 40-plus years in a row, and that trend doesn't look like it's in any danger of stopping anytime soon. The company makes dividend payments every March, June, September, and December.

Buying shares of McDonald's and the other two stocks on this list will ensure you're collecting a great dividend each month of the year.

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McDonald’s - >>> Fast-food giant McDonald’s was as prepared as any restaurant chain could be for a global pandemic. About 65% of McDonald’s restaurants worldwide, and 95% of restaurants in the U.S., are equipped with a drive-thru. When dining rooms were shuttered in 2020, the drive-thru played a critical role for the company.


https://www.fool.com/investing/stock-market/market-sectors/consumer-discretionary/restaurant-stocks/


McDonald’s has also been investing in digital sales and delivery. The company launched a revamped mobile app in 2017 that allowed customers to order and pay from a smartphone, and its McDelivery service hit its stride in 2019 when partnering with DoorDash (NYSE:DASH) brought delivery to more than 10,000 locations.

But McDonald’s wasn’t immune from the turmoil in the restaurant industry during the early days of the pandemic. With fewer commuters, the company’s breakfast business took a huge hit in the U.S. Sales also plunged in international markets where drive-thrus are less prevalent. Global comparable sales tumbled 7.7% in 2020.

Although the pandemic isn’t officially over, McDonald’s is staging a vigorous recovery. Global comparable sales soared 12% in the first quarter of 2022, with modest growth in the U.S. coupled with strong double-digit growth in international markets. Systemwide sales were up 10% year over year.

The investments McDonald’s made in its digital channels before and during the pandemic are also paying off. Systemwide digital sales in the company’s six largest markets topped $5 billion in the first quarter alone, accounting for almost one-third of total systemwide sales. The recently launched MyMcDonald’s Rewards loyalty program already has 21 million customers enrolled, providing a strong incentive to choose McDonald’s over the competition.

Shares of McDonald’s have soared well past their pre-pandemic high, but the stock remains a good choice for investors looking for a high-quality restaurant for their portfolios. With a price-to-earnings ratio of roughly 25 based on the average analyst estimate for 2022, it’s not too late to invest in this top-notch fast-food chain.

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Domino’s Pizza - >>> While McDonald’s only recently embraced delivery, Domino’s Pizza (NYSE:DPZ) long ago perfected the art of getting hot food to people quickly. With Domino’s locations largely tuned to carryout and delivery, the pandemic was a positive for the pizza chain.


https://www.fool.com/investing/stock-market/market-sectors/consumer-discretionary/restaurant-stocks/


U.S. same-store sales jumped by more than 11% in 2020, and international markets posted solid growth as well. The company opened more than 600 new locations in 2020, something that many restaurant chains wouldn’t dream of doing during the uncertainty of the pandemic.

With an increasing number of restaurants turning to third-party delivery services to boost sales, Domino’s is facing more delivery competition than ever. The good news is that Domino’s has some key competitive advantages.

The company and its franchisees do all delivery in-house, and Domino’s charges franchisees a very small fee for digital orders. In contrast, a restaurant using a third-party service pays far higher fees, sometimes passing the cost on to consumers in the form of higher prices. For consumers, third-party delivery often comes with multiple layers of fees that can drastically raise the cost of a meal.

Delivery was necessary for restaurants during the pandemic, but it’s unclear whether many will stick with it once dine-in business fully recovers. Domino’s certainly has a cost advantage over any restaurant using a third-party delivery service.

Business has started to slow down a bit for Domino’s. U.S. comparable sales were down 3.6% in the first quarter of 2022 amid staffing shortages and rising inflation. International comparable sales grew about 1%, enough to drive overall revenue slightly higher, but elevated costs led to a significant decline in profits.

Domino’s sells convenience. It was a popular choice before the pandemic, a very popular choice during the pandemic, and it will likely remain a popular choice after the pandemic. Domino’s stock may be a bit volatile as a lofty valuation collides with a slowdown in growth, but the company is well-positioned to continue to be the undisputed leader in the pizza industry.

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>>> Domino's Pizza posts mixed Q4 earnings report, same-store sales miss estimates


Yahoo Finance

Brooke DiPalma

February 23, 2023


https://finance.yahoo.com/news/dominos-pizza-posts-mixed-q4-earnings-report-same-store-sales-miss-estimates-124014170.html


Domino's Pizza (DPZ) posted fiscal fourth-quarter earnings Thursday before market open that mostly missed estimates. Shares of the pizza chain were down more than 11% in early trading following the results and the earnings call with investors.

The Michigan-based company posted U.S. same-store sales, up 0.9%, far less than analyst estimates of 3.94%. This past quarter, the company navigated implementing higher prices in the U.S. and their effect on same-store sales, potential consumer trade-down, and the impact of inflation on the cost of goods.

Here's what Domino's Pizza reported, compared to Wall Street expectations, per Bloomberg consensus estimates:

Revenue: $1.39 billion versus $1.43 billion expected

Adjusted earnings per share: $4.43 versus $3.97

U.S. same-store sales: up 0.9% versus up 3.64% expected

Franchise-owned stores: up 0.8% versus up 3.4% expected

Co-owned stores: up 3.4% versus 3.13% expected

International same-store sales: up 2.6% versus up 3.93% expected


In the full 2022 fiscal year, global same-store sales for Domino's Pizza grew 3.9%. In the U.S., sales fell 0.8% and international sales grew only 0.1%.

In the fourth quarter, demand for the pizza chain seemed to slip as consumers responded negatively to recent price hikes. Last October, executives announced plans to raise prices around 7% in the fourth quarter, along with plans to increase the price of its Mix & Match deal to $6.99, up from $5.99.

Domino's CEO Russell Weiner called the global brand a "work-in-progress" in unprecedented times. He said "there is no better way to describe this period in our history."

In the fourth quarter, the company saw net store growth of 361 stores, with 43 opening in the U.S. and 318 internationally. In total, 465 locations opened, while 95 stores closed. Throughout fiscal 2022 overall, the brand opened a total of 1,276 stores and closed 244.

Year to date, shares of Domino's Pizza are mostly flat.

Domino's CEO Weiner weighed in on its delivery business in the fourth-quarter, optimistic that it remains ahead of its biggest competitors, such as Pizza Hut (YUM) and Papa John's (PZZA), in the pizza delivery category, despite recent challenges of labor and commodity inflation.

He said: "We experienced significant pressure on our U.S. delivery business in 2022 and focused our efforts on creating solutions. We also drove continued momentum in our U.S. carryout business and achieved strong international store growth. Over half of our orders in the U.S. now come through the carryout channel, and we are #1 in both the delivery and carryout QSR pizza segments. Our brand and company are better positioned than ever to win in the marketplace and create meaningful value for our shareholders."

Some analysts believe Domino's should reconsider adding third-party delivery.

UBS Analyst Dennis Geiger considers the Michigan-based pizza chain among "the most topical & debated stocks" in its coverage "given concerns around the sales & earnings growth trajectory, but with opportunity for sizable upside" with an emphasis on momentum toward "historical growth levels."

Earlier this month, Domino's Pizza introduced loaded potato tots with three flavor options, including Philly cheese steak, cheddar bacon, and melty 3-cheese. Geiger said the firm expects "modest contribution" from the recent addition, plus "1-2 new menu items per year still the playbook." UBS has a Buy rating and $410 price target.

Looking out to the full 2023 fiscal year, Peter Saleh of BTIG said "We estimate that Domino’s has the highest level of menu pricing in more than a decade (over 7%) right now, with potentially more coming, and lapping the lost operating days should add 150-200 bps of comparable sales. The higher pricing and moderating commodity inflation should translate into restaurant margin improvement this year, reversing the over 800 bps gap to its historical average that ranks as the worst among our quick-service coverage."

He later said that inflation that hit the overall cost of goods for the company "peaked." In particular, deflation of cheese, down 10% from the average price last year. If this trend continues, it could help lower the company's overall commodity basket this year, he said. BTIG has a $460 price target and Buy rating.

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Church & Dwight - >>> Church & Dwight is smaller than many of its peers, but the company has delivered a strong return on invested capital and without deviating its focus from personal care and household goods.


https://www.fool.com/investing/stock-market/market-sectors/consumer-staples/personal-care-stocks/


The company’s portfolio of products is among the most stable in the industry, and sales of many of its products increased during the pandemic. The company has been expanding the types of products offered by its well-known brands such as Arm & Hammer. It also owns other top brands, including Trojan, OxiClean, and Orajel.

Church & Dwight last year increased its organic revenue (revenue not accrued through acquisition) year-over-year by 10% and is expecting to continue to increase its organic revenue by 4% to 5% year-over-year in 2021. The company in 2021 is forecasting that its earnings per share will increase by 6% to 8%.

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Procter & Gamble - >>> Procter & Gamble is probably the best-known household products company in the world. P&G has been around for nearly 200 years and owns more than 20 billion-dollar brands, including Tide, Crest, and Bounty. The company benefits from a huge distribution network and relationships with a wide range of retailers and other end sellers. It’s also one of the largest advertisers in the world.

With diversification across multiple categories, including health, beauty, grooming, and cleaning products, Procter & Gamble is well-positioned to perform strongly on a consistent basis. It’s also a Dividend Aristocrat, having raised its dividend every year for 63 consecutive years. P&G's dividend yield at the time of this writing is an attractive 2.6%.

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https://www.fool.com/investing/stock-market/market-sectors/consumer-staples/personal-care-stocks/


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>>> Investing in Top Consumer Discretionary Stocks


Motley Fool

By Jeremy Bowman

Jan 20, 2023


https://www.fool.com/investing/stock-market/market-sectors/consumer-discretionary/


Consumer Discretionary Stocks

When it comes to shopping, there are things that you need and things that are just nice to have. The consumer discretionary sector is in that second category. It includes goods and services that people spend money on when they have a little extra cash available, such as travel, going out to restaurants, or fashion and jewelry.

Unlike consumer staples companies, which make necessities, consumer discretionary stocks tend to do well when the economy is strong and poorly when times are tough. Keep reading to learn about the consumer discretionary sector and some top stocks to consider.

The COVID-19 pandemic impacted the consumer discretionary sector differently than it did the consumer staples sector, which sells necessities.

Understanding consumer discretionary stocks

Consumer discretionary businesses cover several different industries, but all rely on consumers spending money that they don't need to spend.

Consumer discretionary companies include the following types of businesses:

Makers of furniture, appliances, housewares, and other home furnishings

Consumer electronics manufacturers

Apparel and luxury goods companies

Retailers of various kinds, including department stores, home improvement retailers, electronics retailers, home furnishers, and clothing stores

Direct-to-consumer retailers that sell goods by catalog, mail, or via e-commerce

Hotel, resort, and casino operators

Restaurant companies

Cruise operators

Consumer discretionary stock prices tend to rise and fall with the overall economy, making them cyclical stocks. The COVID-19 pandemic created unprecedented challenges for many consumer discretionary companies. But, as the economy reopens, investors have a unique opportunity in the sector. More recently, rising interest rates have the potential to cool economic growth, presenting a challenge for consumer discretionary companies in today’s stock market.

Focusing on well-known brands and industry leaders in this sector is generally a formula for success since the best stocks have long been winners for investors. These companies should also be better able to weather a recession and endure the ongoing bear market since they have deeper pockets and brand equity to fall back on.

Best consumer discretionary stocks in 2023

Several consumer discretionary companies stand out as being among the best in their industries:

Nike (NYSE:NKE) Athletic apparel and footwear

Starbucks (NASDAQ:SBUX) Coffeehouse chain

McDonald's (NYSE:MCD) Restaurant chain

TJX Companies (NYSE:TJX) Off-price retailer

Disney (NYSE:DIS) Family entertainment


1. Nike

Nike has established a dominant position in athletic footwear and apparel, with more than half a century of innovation in making sportswear appealing to a broad consumer audience. The strength of Nike's business model stems from its product innovation, marketing strength, use of celebrity endorsements, and tying the success of high-profile athletes to the company's products. The company has a long history of outperforming the S&P 500.

Long after Michael Jordan left the professional basketball court, Air Jordan shoes remain a mainstay of Nike's business. Nike’s market share of athletic footwear, recently estimated at 39%, puts it well ahead of international competitors Adidas (OTC:ADDYY) and ASICS (OTC:ASCCF). With the global sportswear company working to play a bigger role in fast-growing areas such as China, the sky's the limit for Nike's future growth.

Although COVID-19 has affected Nike’s business, and tight restrictions in China have weighed on performance in the region, the pandemic has also accelerated the company’s shift to digital and direct channels, which is a key part of its strategy. Nike has built a strong digital ecosystem around apps such as SNKRS and the Nike Training Club, which has buffered much of the impact. Even though revenue growth has been sluggish during the pandemic, the company has delivered solid profits and has outperformed rivals such as Adidas and Under Armour (NYSE:UAA)(NYSE:UA).


2. Starbucks

The coffee company plays a major role in how a large part of the world's population starts its day. By introducing the European café concept to the U.S., Starbucks tapped into consumers’ urge to treat themselves to affordable luxuries, and its premium beverages now have a loyal following the world over.

You can see the company’s success in its comparable-store sales, which have a history of steadily growing. Although those sales numbers fell sharply during the pandemic, Starbucks is rebounding in the U.S. However, it’s facing similar challenges to Nike in China as its zero-Covid policy has cooled off sales there.

In September 2022, the company announced a “reinvention plan” to drive annual comparable sales growth rate of 7%-9% and net sales growth of 10%-12% over the next three years by investing in employee engagement, store efficiency, digital programs, Starbucks Rewards membership, product innovation and new stores. As of April 2022, the company had more than 34,948 locations across the globe and expects to have 55,000 locations by 2030, indicating no shortage of growth opportunities.


3. McDonald's

McDonald's has come a long way from its heyday in the mid-20th century, and the fast-food colossus has worked hard to keep up with the times. Innovations such as digital menus that automatically change throughout the day, automated kiosks for ordering, online and mobile order capabilities, and delivery options are making McDonald's more accessible than ever.

At the same time, the restaurant chain still has an emphasis on value that keeps customers coming back for more, plus its drive-thrus helped it weather the pandemic better than many others. Although it’s a restaurant chain, the emphasis on value gives it some elements of a consumer staples company. After all, everybody needs to eat, and it’s easy to get a cheap and convenient meal at McDonald’s.

The company also owns much of the real estate that its franchised restaurants occupy, allowing it to collect rent while franchisees do the hard work of running restaurants.

Even in the ever-changing restaurant space, McDonald's has found a way to stay relevant, and its growth numbers have been strong over the past several quarters as it’s been a winner in the economic reopening.

Investors also like McDonald's for its consistent dividend payments. It has increased payments to shareholders each year since the mid-1970s, making the company a Dividend Aristocrat. With a payout ratio of around 60% of earnings, McDonald's can comfortably maintain its dividend.


4. TJX Companies

Off-price retail giant TJX Companies has found success in apparel and home goods with a business model that’s not easily replicated online. The parent company of TJ Maxx, Marshall’s, and Home Goods obtains discounted brand-name merchandise through close-out sales, manufacturer errors, and order cancellations, and then sells the merchandise at 20% to 60% discounts.

The company's business has generated wide profit margins and solid growth over the years. It plans to expand to more than 6,000 stores globally, up from about 4,500 today.

Although TJX took a hit during the pandemic like other discretionary retailers, the company bounced back in 2021. While apparel and home goods retailers are facing headwinds in 2022 as consumer spending shifts back to services, TJX still expects modest comparable sales growth for the year. The company has increased year-to-date profits at a time when many of its peers are struggling with bloated inventory levels.


5. The Walt Disney Company

This household name in family entertainment has been a staple of U.S. pop culture for generations. The company’s theme parks and animated movies are popular everywhere. Today, the company also owns ABC, ESPN, Pixar, Marvel, Star Wars, a majority stake in Hulu, and a vast array of assets that it acquired from Fox in a 2019 deal.

Disney has a number of competitive strengths, including an unrivaled trove of intellectual property and a business model that enables successful movies such as Frozen to be spun into multiple business lines, including theme park rides, toys, consumer products, and even live entertainment.

The company was affected on multiple fronts by the pandemic. Its theme parks were shut down or operating at limited capacity, movie theaters went dark, and live sports were even canceled for several months. However, the company has found a winner with its streaming service, Disney+, which launched in 2019 and now has more than 100 million subscribers. Disney has restructured its entertainment business to make Disney+ its centerpiece, although investors now seem concerned about slowing growth in the streaming industry, especially after Netflix (NASDAQ:NFLX) suddenly hit a wall.

With the economy continuing to reopen, Disney looks poised to be among the winners in the recovery. The company reported a surge in profits in its parks and resorts segment, and it could even post record attendance due to pent-up demand.

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>>> Investing in Consumer Staples Stocks


Motley Fool

By Jeremy Bowman

Jan 24, 2023


https://www.fool.com/investing/stock-market/market-sectors/consumer-staples/


You rely on consumer staples every day. They include daily essentials such as food and beverages, personal care products, household and home care products such as paper goods, and alcohol, tobacco, and cosmetics.

You buy consumer staples regardless of the state of the economy, and the amount you buy is relatively fixed in good times and bad. In this way, the consumer staples sector behaves much differently than consumer discretionary businesses such as restaurants, hotels, and apparel, or consumer durables, which are long-lasting products such as furniture and electronics.

Consumer staples companies may not have the highest earnings growth or year-over-year revenue growth because these stocks tend to be large, mature companies. Historically, the sector has experienced relatively little disruption. But these stocks make up for modest growth with low price volatility, reliable profits, dividends, and defensive positioning.

Advantages of consumer staples stocks

Consumer staples stocks function in a non-cyclical manner, meaning they offer investors safety during recessionary climates. Since these companies sell goods such as food and cleaning products that consumers rely on regardless of the state of the economy, they tend to generate solid profits even in weak economies. For instance, a number of consumer staples companies thrived during the early stages of the COVID-19 pandemic as consumers stocked up on essentials and avoided spending on discretionary purchases such as travel and restaurant meals.

More recently, that spending has shifted back to discretionary categories, weighing on some consumer staples stocks such as Clorox (NYSE:CLX), which had earlier benefited from the demand for cleaning products.
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Consumer staples are noncyclical, meaning they offer investors safety during recessionary climates.

Some consumer staples stocks are Dividend Aristocrats -- companies that have increased their dividend payouts every year for at least 25 consecutive years. For this reason, consumer staples stocks are often popular with retirees and other investors seeking long-term income and security. Many offer better dividend yields than an S&P 500 exchange-traded fund (ETF), which currently pays a dividend yield of roughly 1.5%.

Because consumer staples companies operate in stable sectors and sell products that are always in demand, the biggest ones have been around for a century or more. Their longevity is a reflection of their brand value, a history of acquiring smaller brands, and their ability to endure a wide range of challenges and economic cycles.

One important factor to monitor when looking at a consumer staples company is its ability to pass on cost increases. Although this issue often takes center stage during inflationary periods (like today), it is always an important component of growth. Simple price increases, changing packaging sizes, and production innovation are all vital tactics that get used. In inflationary periods, costs for ingredients, labor, and distribution often rise faster than a company’s ability to pass on price changes. There can be a period of margin weakness that will likely be temporary for the best-managed consumer staples companies. Price increases also need to be balanced against the risk of consumers trading down to cheaper alternatives.

Best consumer staples stocks to buy in 2023

Just as you’re familiar with many consumer staples products, you’ll likely be familiar with many of the top stocks in the sector such as Procter & Gamble (NYSE:PG), PepsiCo (NYSE:PEP), and Estee Lauder (NYSE:EL). For those interested in a contrarian name, Unilever (NYSE:UL) is also worth examining.

1. Procter & Gamble

Procter & Gamble is best known for its marquee brands such as Tide, Gillette, and Crest. The household and personal care company is almost 200 years old. A large number of its brands hold the No. 1 or No. 2 market share position in their categories, including paper products, laundry detergent, diapers, and beauty products. P&G is also a Dividend Aristocrat.

P&G is currently developing innovative products, including the nontoxic insect repellent Zevo. In 2019, it released a line of plant-based cleaning products called Home Made Simple. After streamlining its business by selling off non-core brands, restructuring, and cutting costs, P&G's position is as strong as ever.

Like other consumer staples companies, P&G received a healthy boost from the pandemic. However, the company’s results have continued to be strong, with organic sales (which exclude the effects of acquisitions, divestitures, and currency exchanges) up 10% during the fiscal third quarter ending June 30, 2022. Core earnings per share also rose 6%. Notably, the organic sales gain was driven by a mixture of higher volume, price increases, and selling more higher-priced items. The company is hitting on all cylinders.


2. PepsiCo

PepsiCo is much more than its namesake beverage brand. The company also owns Frito-Lay and Quaker, as well as popular drink brands such as Mountain Dew and Gatorade. Its Frito-Lay snack business generates almost as much revenue in North America as its beverages, and that business has been a source of growth while soda sales slow in the U.S. and around the world. With its global brands and distribution, Pepsi enjoys many of the same advantages as industry giants P&G and beverage company competitor Coca-Cola (NYSE:KO).

Because of its exposure to the restaurant industry, Pepsi was more affected by the early stages of the pandemic. However, the company was able to quickly recover, and it posted 9.5% organic revenue growth in 2021. Through the first six months of 2022, it kept the ball rolling by expanding organic revenue growth by 13.3%.

Pepsi has also grown through acquisitions. In 2018, it acquired SodaStream, which gave the company a leading position in countertop soda-making. It also bought energy drink maker Rockstar Energy in 2020.

PepsiCo recently became a Dividend King, having raised its quarterly payout for 50 years in a row, which shows that it’s an attractive stock for income investors.


3. Estee Lauder

The cosmetics subsector tends to be more volatile than other parts of the consumer staples industry. That’s because trends in the beauty business, which are subject to broader fashion tastes, tend to change more quickly and attract smaller brands.

Additionally, cosmetics companies were hit harder by the COVID-19 pandemic than most consumer staples businesses because social distancing led to a decline in the demand for makeup and fragrances.

Nonetheless, Estee Lauder has been a top performer, more than doubling the S&P 500’s roughly 60% return over the past five years. However, that includes a more dramatic ascent and a much steeper decline during the 2022 bear market, highlighting the volatile nature of the sector.

Estee Lauder is the second-biggest pure-play cosmetics company in the world behind L’Oreal (OTC:LRLCY), and it has an impressive array of prestige beauty brands, including Clinique, Aveda, La Mer, and MAC. The company’s recent growth has been driven in large part by its success in the Chinese market, where its skin care products have performed particularly well.

That said, recent efforts in China to contain the spread of COVID-19 have led the company to reduce its fiscal 2022 guidance. The drop was notable, taking organic sales growth to between 5% and 7%, down from the previous guidance of 10% to 13%. Still, the stock is likely to be a good choice for investors looking for a mix of high growth and the stability of a traditional consumer staples stock despite the near-term uncertainty related to pandemic issues.


4. Unilever

For investors who prefer to take a contrarian approach, Unilever is working on a business turnaround. The negatives here, which include the failure to consummate a high-profile acquisition, have left the shares with a historically high dividend yield of about 4.2%. What’s most interesting, however, is that activist investor Nelson Peltz – who was instrumental in turning Procter & Gamble’s business around – has been added to Unilever’s board of directors.

Although there is unlikely to be a short-term fix to Unilever’s problems, the company is already streamlining its business to increase the accountability of key leaders, something Peltz has suggested is necessary. And, with iconic global brands such as Dove, Ben & Jerry’s, Knorr, and Hellmann’s, the company has a strong brand portfolio to lean on as it works to improve its growth profile. Long-term investors can happily collect the generous yield while waiting for Unilever’s business performance to improve.

Best Consumer staples ETFs

For investors who prefer exposure to the whole consumer staples sector rather than picking individual stocks, buying shares in an exchange-traded fund (ETF) is the most sensible option. The chart below summarizes three different consumer staples ETFs:


CONSUMER STAPLES SELECT SPDR FUND (NYSEMKT:XLP) 0.1%

VANGUARD CONSUMER STAPLES ETF (NYSEMKT:VDC) 0.1%

ISHARES U.S. CONSUMER GOODS ETF (NYSEMKT:IYK) 0.39%


All three ETFs have Procter & Gamble as their No. 1 holding. PepsiCo and Coca-Cola show up in the next two slots of each top-10 list, with Estee Lauder turning up lower down on two of the three lists. The iShares U.S. Consumer Staples ETF doesn’t include retailers, but the other two ETFs have giants such as Walmart (NYSE:WMT) and Costco (NASDAQ:COST) making the cut.

In addition, all three ETFs own popular consumer staples stocks such as:

Philip Morris (NYSE:PM)
Mondelez (NASDAQ:MDLZ)
Altria (NYSE:MO)
Colgate-Palmolive (NYSE:CL)

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Pepsico - >>> 2 No-Brainer Stocks to Buy Even During a Stock Market Plunge


Motley Fool

By Reuben Gregg Brewer

Nov 15, 2022


https://www.fool.com/investing/2022/11/15/no-brainer-stocks-buy-even-stock-market-plunge/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


KEY POINTS

When investors get irrational it is often time to get contrarian and start buying.

PepsiCo has a strong portfolio that spans multiple categories and supports a growing dividend.

Walmart is a massive retailer with which few can compete and it's on the verge of becoming a Dividend King.


If these reliable consumer stocks sell off deeply, you'll want to jump aboard and hold for a long, long time.
Bear markets are terrible to live through, with volatile markets often markets by swift declines and ascents as stocks chart a generally downward path. It is very hard to maintain the fortitude needed to buy and hold when Wall Street is in a deeply negative mood. This is where focusing on stocks paying dividends can help you manage your concerns.

Today we are going to focus on two iconic dividend names -- PepsiCo (PEP 0.72%) and Walmart (WMT 1.51%). Let's see what makes them no-brainer buys should the market plunge further.

1. PepsiCo: More than drinks

Whenever the name Pepsi comes up, the obvious next thing that invariably happens is a comparison to Coca-Cola. But that's actually not a great comparison anymore. Yes, both companies market internationally known drink brands, but PepsiCo is so much more than a beverage company. It also owns snack food giant Frito-Lay and a host of food brands, headlined by Quaker Oats. In other words, it is far more diversified than Coca-Cola. For conservative investors that should be seen as a key selling point.

Inflation is a very real headwind for PepsiCo today, as it is for all consumer staples stocks. But the playbook from here is pretty simple, cut costs and raise prices. So far the company has been relatively successful, though it wouldn't be surprising to see consumers eventually start to push back on price hikes. Still, it is really just a timing game as PepsiCo looks to protect its margins, a process that may require some near-term margin compression while further price hikes work through the system. So far, investors have given management the benefit of the doubt, with the stock actually higher by a couple of percent in 2022.

If, however, the bear market picks up steam and PepsiCo gets dragged down along with it, dividend investors should be ready to jump aboard. The company's solid business foundation is the core reason for this, but don't forget that the soda and food giant increased its dividend annually for five decades and counting. Over the past 10 years, the average annual increase has been roughly 7.5%, which is very generous for such a large company.

While PepsiCo isn't cheap today, with its price-to-earnings and price-to-sales ratios fairly close to their five-year averages, a sharp bear-driven decline could quickly change that for patient, and astute, investors.


2. Walmart: The retail king

Walmart is a very different type of company, but one that also stands apart from the pack in terms of size and diversification. Although it is one of the world's largest retailers, its business spans from tech gadgets to clothing to food to toiletries, and a whole lot in between. It has multiple store formats from smaller grocery stores to giant big box warehouse outlets. And it operates in countries around the world. If you had to pick just one retailer, Walmart would be a solid choice. Notably, even though rising costs are hitting earnings, Walmart is seeing solid revenue growth across its major divisions.

The stock is only down a few percentage points so far in 2022, which is a reflection of the market's perception of the company. It has, indeed, lived up to high dividend expectations over the long term and is on the verge of hitting Dividend King status with nearly 50 years of annual dividend increases on record. If you don't own it, now might not be the best time to jump aboard because the stock doesn't look particularly cheap when examining things like price-to-earnings and price-to-sales ratios.

That, however, doesn't mean that investors won't suddenly become fearful and throw the baby out with the bathwater. Having a wish list ready for such occasions, with names like Walmart on it, will help you move counter to the market's broader actions. In other words, if Walmart sells off sharply, as it did in the first half of 2022, you'll want to be ready to pounce.

Rational decisions in irrational times

Fear leads investors to make bad long-term decisions. If you prepare ahead of time you can make better decisions while others are acting rashly. This is exactly why you want to keep a close eye on industry-leading names like PepsiCo and Walmart. Get to know them now, so you won't hesitate when the market offers you a good price on these reliable dividend stocks.

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>>> Keurig Dr Pepper Inc. (KDP) operates as a beverage company in the United States and internationally. It operates through Coffee Systems, Packaged Beverages, Beverage Concentrates, and Latin America Beverages segments. The Coffee Systems segment manufactures and distributes various finished goods related to its coffee systems, K-Cup pods, and brewers, as well as specialty coffee. This segment sells its brewers through third-party distributors and retail partners, as well as through its website at keurig.com. The Packaged Beverages segment engages in the manufacture and distribution of packaged beverages of its brands; contract manufacturing of various private label and emerging brand beverages; and distribution of packaged beverages for its partner brands. The Beverage Concentrates segment manufactures and sells beverage concentrates primarily under the Dr Pepper, Canada Dry, A&W, 7UP, Sunkist, Squirt, Big Red, RC Cola, Vernors, Snapple, Mott's, Bai, Hawaiian Punch, Clamato, Yoo-Hoo, Core, ReaLemon, evian, Vita Coco, and Mr and Mrs T mixers brands. This segment also manufactures beverage concentrates into syrup. The Latin America Beverages segment manufactures and distributes carbonated mineral water, flavored carbonated soft drinks, bottled water, and vegetable juice products under the Peñafiel, Clamato, Squirt, Dr Pepper, Crush, and Aguafiel brands. The company serves retailers, bottlers and distributors, restaurants, hotel chains, office coffee distributors, and end-use consumers. Keurig Dr Pepper Inc. was founded in 1981 and is headquartered in Burlington, Massachusetts.

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Pepsico - >>> 2 High-Yield Dividend Stocks to Buy Now


Motley Fool

By Manali Bhade

Mar 30, 2022


https://www.fool.com/investing/2022/03/30/2-high-yield-dividend-stocks-to-buy-now/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


KEY POINTS

Snack and beverage giant PepsiCo will soon enter the prestigious Dividend Kings list.

Solid business fundamentals and a robust balance sheet make Iron Mountain attractive.

Regular income streams can make it easier for retail investors to withstand the current market volatility.
The U.S. equity market has seen some rocky times in the past few months. According to the AAII Investor Sentiment Survey, investors think the direction of the stock market in the next six months could be unusually bearish, as it has been for the past 17 weeks.

However, many high-quality dividend stocks have managed to withstand the downward pressure even in such difficult times. These stocks generate regular income and are considered safe havens in times of heightened market volatility.

PepsiCo ( PEP 1.42% ) and Iron Mountain ( IRM 1.48% ) are two dividend stocks that are currently trading at or near their 52-week highs. Here are a few reasons investors might regret not buying these stocks now.

1. PepsiCo

Consumer staples giant PepsiCo is gearing up to become a Dividend King in 2022. In February, this global beverage and snacks company announced a 5% year-over-year hike in its quarterly dividend to just below $1.08 per share, payable on March 31. The company has a dividend yield of 2.63%.

PepsiCo's current dividend payout ratio is 77%, which although not low, is still manageable considering its inflation-proof and low-risk business. The company plans to return $7.7 billion to shareholders in fiscal 2022, made up of $6.2 billion in dividends and $1.5 billion in share repurchases.

NASDAQ: PEP
Pepsico, Inc.

Today's Change
(1.42%) $2.38
Current Price
$169.76

PepsiCo enjoys significant brand power, thanks to the worldwide popularity of Pepsi and other beverages such as Gatorade and Mountain Dew. The company's snacks business includes the chips brands Frito-Lay, Ruffles, and Doritos, and it also has a breakfast food division. Both non-beverage businesses were a solid hit during the pandemic and continue to be big revenue drivers even after the relaxation of social distancing regulations. In fiscal 2021 (ended Dec. 25), the company's revenue was up 12.9% year over year to $25.3 billion.

Like many other companies, PepsiCo has faced rising commodity costs. But it has managed to offset much of this by charging higher prices. In the fourth quarter, the company increased its overall pricing by seven percentage points while sales volume grew by four percentage points. Subsequently, it reported an operating profit of $11.16 billion in fiscal 2021, up 10.7% year over year.

Pepsico is guiding for 6% year-over-year organic revenue growth in fiscal 2022, which is at the higher end of its long-term range. The confidence of the company in its execution capabilities in current challenging times coupled with a solid dividend yield make this soon-to-be Dividend King an attractive bet in 2022
.

2. Iron Mountain

Iron Mountain is a global leader in records storage and information management services (paper storage) that is fast moving toward becoming a prominent digital storage player. The real estate investment trust (REIT) has a solid client base of more than 225,000 customers in 1,450 locations across 63 countries.

The company's operations take up around 95 million square feet of real estate, of which 25 million square feet is self-owned.

Iron Mountain Incorporated (IRM)

Today's Change
(1.48%) $0.82
Current Price
$56.23

Iron Mountain's legacy paper storage business continues to be a cash cow despite ongoing global digitization. The company earns the bulk of its revenue from contracted storage rental fees and can pass along some of the inflationary impacts in the form of increased pricing.

Its records management business has a solid 98% customer retention rate. In fiscal 2021, the company reported a 2.6% year-over-year jump in organic storage-rental revenue, driven by robust pricing and volume trends.

The company is positioning itself as a major data center player and has leased 49 megawatts in fiscal 2021, much higher than its target of 30 megawatts. Iron Mountain has a total data center capacity of more than 600 megawatts and can effectively cross-sell to its broad customer base, which includes around 95% of the Fortune 1000 companies.

The REIT pays a handsome dividend yield of 4.74%, with an adjusted funds from operations (AFFO) payout ratio in the mid-60s range at the end of fiscal 2021, within the company's long-term target. AFFO is a key metric used to assess the profitability of a REIT. Iron Mountain expects its future dividends to rise at the same pace as its AFFO per share.

The REIT also has a strong balance sheet with $2 billion of liquidity and net lease-adjusted leverage at a 5.4 multiple, lower than the 5.9 multiple of the J.P. Morgan ( JPM -0.74% ) REIT Composite. A robust business model coupled with a healthy balance sheet will ensure that dividend payouts are quite safe for several years to come.

Iron Mountain expects its AFFO to be in the range of $1.08 billion to $1.12 billion in fiscal 2022.

IRM PS Ratio (Forward) Chart

IRM PS ratio (forward). Data by YCharts.

The company is currently trading at a forward price-to-sales ratio that is far lower than those of other well-managed and profitable REITs such as American Tower, Innovative Industrial Properties, and Equinix. Buying shares of a highly profitable and high-yield REIT in these inflationary times is one strategy that can potentially pay handsome returns, considering its very reasonable valuation.

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>>> 3 Reasons to Buy PepsiCo Stock


Motley Fool

By Kody Kester

Mar 17, 2022


https://www.fool.com/investing/2022/03/17/3-reasons-to-buy-pepsico-stock/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


KEY POINTS

PepsiCo's timeless brands helped it generate double-digit revenue and earnings growth in 2021.

The stock's dividend is primed to keep growing in the high single digits annually.

PepsiCo appears to be rationally valued by the market at this time.


There's a lot to like about the food and beverage giant besides its market-topping 2.9% dividend yield.
Since hitting an all-time high last November, the Nasdaq Composite has plunged as much as 20% in value and is currently down about 17.1%. Several popular stocks in the index have fallen even further, but some Nasdaq-traded stocks have not been hit nearly as hard.

For instance, consumer staples giant PepsiCo is trading down only about 9.9% from its peak $177 share price reached in January. The recent correction in PepsiCo's stock seems to be a temporary issue related to its most recent earnings report and actually just created a buying opportunity for some investors. The price drop is one rather obvious reason to buy this value stock, but there are at least three other reasons to consider. Let's dive into the stock's fundamentals and valuation and find out why PepsiCo is a buy right now.

1. PepsiCo has brand power and it flexed it in 2021

PepsiCo reported its earnings for the fiscal year ended 2021 in mid-February, and the earnings results for the year were arguably very positive for shareholders.

PepsiCo produced $79.5 billion in net revenue in 2021, equivalent to a 12.9% growth rate. So how did the $220 billion (by market capitalization) snack and beverage company pull off double-digit net sales growth last year?

The answer lies within PepsiCo's leading portfolio of brands, including the eponymous Pepsi, Lay's, Gatorade, Mountain Dew, SodaStream, and Quaker Oats, that each generates $1 billion-plus in annual revenue. As a result of these leading brands, PepsiCo's products are consumed more than 1 billion times every day by people in over 200 countries and territories throughout the world.

PepsiCo recorded a 2.5% increase in its convenient food volumes in 2021, while the company posted an even better 10% bump in beverage volumes. The company's total organic volumes were 4% higher in 2021 than the year-ago period. And the effective 5% net price hikes that PepsiCo passed along to consumers were another piece of how the company logged double-digit net revenue growth in 2021. PepsiCo's acquisitions of Pioneer Foods and Be & Cheery chipped in another 2% to net revenue growth, and favorable currency translations were responsible for the remaining 1% of net sales growth.

PepsiCo's non-GAAP (adjusted or core) diluted earnings per share (EPS) surged 13.4% higher to $6.26 in 2021. How did the company accomplish this? Two factors led to this earnings growth. Aside from PepsiCo's higher net revenue base, the company's non-GAAP net margin edged a single basis point higher to just over 10.9% in 2021. The other reason for the company's earnings growth was a 0.2% reduction in PepsiCo's weighted average outstanding share count to 1.39 billion, which was due to share buybacks executed during the year.

Analysts anticipate that PepsiCo's momentum will continue but to a lesser extent in the medium term. This is reflected by the fact that analysts are forecasting 8% annual core EPS growth over the next five years.

2. PepsiCo will soon qualify as a Dividend King

PepsiCo had a strong showing in 2021 and has an encouraging outlook for the foreseeable future. That makes it clear why the company's board of directors announced a 7% raise in the annualized dividend per share to $4.60. The dividend increase will begin with the quarterly dividend that is expected to be paid in June. Once paid, this will mark the stock's 50th consecutive year of dividend raises, which will make it a Dividend King.

PepsiCo's dividend payout ratio of 67% for 2021 is only a tad high, but still quite manageable. That's why dividend growth will probably slightly lag earnings growth over the next several years. But even so, I believe the company can keep handing out 7% annual dividend increases to get that payout ratio just below 65% by the end of 2026.

Along with PepsiCo's market-beating 2.9% dividend yield, this is an enticing blend of yield and growth prospects.

3. The stock is reasonably valued

The third reason to consider buying PepsiCo is that the inflation-proof stock looks to be sensibly priced.

PepsiCo is trading at a forward price-to-earnings ratio of 21.9, slightly below the nonalcoholic beverages industry average of 22.7. Even considering that PepsiCo's 8% annual earnings growth potential is a bit lower than the industry average of 9%, the steady nature of the stock arguably deserves a premium. PepsiCo's trailing-12 months dividend yield of 2.7% is also essentially in line with the 13-year median of 2.8%, which is further confirmation that the stock is a buy for dividend growth investors.

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Procter & Gamble - >>> 3 Top Stocks to Buy During a Sell-Off


Motley Fool

By Reuben Gregg Brewer -

Mar 17, 2022


https://www.fool.com/investing/2022/03/17/3-top-stocks-to-buy-during-a-sell-off/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


2. Procter & Gamble: Smaller and better

Procter & Gamble's current elevated share price is directly related to its recent success. In fact, despite inflationary headwinds, it has been able to increase its organic sales while it has been increasing prices.

Don't underestimate how impressive a feat that is, as some of the company's peers have been slammed by rising costs that they couldn't pass on to customers. The real story here dates back a few years, to when Procter & Gamble was supporting a bloated portfolio of smaller brands that just didn't add much to the overall business.

This is why the consumer staples giant decided to slim down, jettisoning all but a core portfolio of large, well-performing names. Since that point, Procter & Gamble has really been on fire, as it has refocused its support on the brands that matter most.

Just how good? Earnings grew 1% in the fiscal second quarter of 2022 -- which sounds terrible until you realize that was lapping 15% growth in the prior year. And it means that Procter & Gamble effectively kept all of the earnings benefit it saw from the elevated consumption during the 2020 pandemic.

This innovation-driven consumer products maker is executing at the top of its game, and a bear market pullback should be welcomed as an opportunity for investors to jump aboard at a more desirable price point. Notably, income growth-oriented investors should consider that the last dividend increase here was a generous 10%.

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>>> Toxins in Household Products Leave FDA Chasing a Vapor Trail

Finding source of carcinogens in sunscreen, antiperspirant challenges regulator and companies


Bloomberg

By Anna Edney

December 29, 2021


https://www.bloomberg.com/news/articles/2021-12-29/toxins-in-household-products-leave-fda-chasing-a-vapor-trail?srnd=premium


When the Food and Drug Administration last week identified the likely sources of a powerful carcinogen that's been found in a myriad of personal-care products, it was the latest development in a year of recalls that has shown the potential dangers of everyday products Americans have long assumed are safe.

Benzene is a known carcinogen, linked to leukemia and other blood cancers, and traces of it have recently been identified in everything from sunscreen to antiperspirant. But determining its origin isn’t a simple matter. The supply chains that bring American consumers their grooming products are so massive and complex that benzene contamination could come from any one of a number of places: a preservative, a propellant, a thickener — all targeted by U.S. health authorities as possible sources.

The chemical is not supposed to be used to make such products, and companies including Johnson & Johnson, Procter & Gamble Co. and Bayer AG that have initiated recalls say they don’t. Yet it has nonetheless slipped through the cracks and into several commonly used grooming products. And no one noticed until a small lab in New Haven, Connecticut, called Valisure went looking. Valisure’s findings that began in March set off a string of benzene-related recalls culminating in a Dec. 23 FDA request for companies to test any products at risk of contamination.

The agency request highlights one of the inherent challenges in its oversight of consumer products: It doesn't conduct testing for contaminants, leaving labs like Valisure and companies themselves to scout them out.

“The agency’s focus is on ensuring that manufacturers are following their legal requirements for good manufacturing practices and identifying and reporting unacceptable levels of benzene quickly so that these products do not reach American homes,” Audra Harrison, a spokeswoman, said in an email.

Valisure started off earlier this year testing liquid and gel hand sanitizers, but the benzene-related recalls of late have centered on aerosol products like certain Neutrogena sunscreens from Johnson & Johnson, Old Spice and Secret antiperspirants from P&G and Bayer’s foot sprays Lotrimin and Tinactin. P&G earlier this month also expanded its recall to dry shampoos and conditioners that don’t require water to apply, including those sold under the brand names Pantene and Herbal Essences. Not every company that sells products Valisure found to be contaminated have conducted recalls and Valisure has tested only a small window of personal-care products.

Sunscreens, antiperspirants and the foot sprays are all considered drugs by the FDA, while shampoos and conditioners are considered cosmetics. Only P&G offered any insight into its recalls, saying the propellants used by a manufacturing partner that it declined to name were to blame for the contamination. J&J didn’t respond to a request for comment. Beiersdorf AG, which has pulled some aerosol Coppertone sunscreens, and Bayer declined to comment on the cause of their recalls or what they’re doing to ensure benzene doesn’t taint their products again.

Some companies didn't recall products even after Valisure identified benzene in them. Those include antiperspirant sprays from Walmart Inc.’s Equate brand and Unilever PLC’s Suave as well as a Summer’s Eve vaginal spray from Prestige Consumer Healthcare Inc. The lab also found benzene in aloe after-sun products from CVS Health Corp. The company halted sales on certain aloe products said Michael DeAngelis, a spokesman, but he declined to offer any more insight into the cause of the contamination or steps the company is taking to ensure it isn’t repeated. Unilever said in an emailed statement it conducted a “robust investigation” of its antiperspirants and deodorants and is confident in their safety. Walmart and Prestige didn’t respond to requests for comment.

Aerosols are difficult to manufacture. Many are made in bomb-proof facilities since the propellants, such as butane and propane, are derived from petroleum and are prone to explode. Companies that sell the antiperspirants, sunscreens and other products to consumers may turn to specialized firms to make and fill their aerosol cans. They also rely on a network of suppliers that each provide a specific component of a product and often operate in distant countries where labor is inexpensive and regulation is lax.

Aerosol manufacturers are reevaluating many aspects of their industry, including its supply chain and examining specifications for raw materials, including propellants, Alexandra Hayes, a spokeswoman for the Household & Commercial Products Association, said in an email. The lobbying group represents companies that sell and manufacture consumer aerosol products.

“During the manufacturing process, traces of benzene may be present in a variety of raw materials, which may include the propellant that is used to disperse contents from an aerosol can," Hayes said. “While it is not intentionally added in consumer products, its exact source may be difficult to pinpoint.”

Consumer companies have said they’ve found only small traces of benzene that shouldn’t be enough to cause cancer. And the personal-care industry has been quick to stress that people are also routinely exposed to benzene circulating in the air from other sources, mostly cigarette smoke and gasoline fumes.

Still, the FDA is asking consumer companies to recall anything that contains benzene levels higher than 2 parts per million. Valisure found levels as high as 6 parts per million in sunscreens and triple that in antiperspirants. Experts advise reducing exposure to the chemical whenever possible.

“For known human carcinogens there is no safe amount, they increase our exposure to some degree,” said Peter Orris, chief of occupational and environmental medicine at the University of Illinois Hospital and Health Sciences System. “Reducing the amount of exposure to human carcinogens is important because we’re in a soup of different ones.”

Stephen Petty, president and founder of the consulting firm Engineering & Environmental Services Group and an expert on benzene contamination, has testified in hundreds of trials on behalf of plaintiffs suing companies. Manufacturers often claim concentrations in their products are low, he said.

“But if you use it a lot and on a lot of skin area, that might not matter," Petty said. "It really depends on skin area and how much you use it.”

Valisure originally decided to test hand sanitizers for benzene after its Chief Scientific Officer Kaury Kucera learned the FDA temporarily allowed the cleansers to contain trace amounts of the chemical to fill the supply gap during the start of the Covid-19 pandemic. The lab found benzene levels as high as 16 parts per million in hand sanitizers that had recently come on the market to make up for a shortage of name brands like Purell. Hand sanitizers that come in a gel form often rely on a thickening agent called a carbomer, one of the ingredients the FDA flagged last week that could be causing the benzene contamination.

Pharmaceuticals can also rely on carbomers as a binding agent to make pills or for use in extended release formulations. The FDA also said an antifungal preservative called sodium benzoate may form benzene under certain circumstances. An online search found that many brand-name body washes and liquid hand soaps list sodium benzoate as an ingredient. When asked, the FDA declined to identify the specific types of drugs that contain carbomers or sodium benzoate.

The FDA also flagged isobutene and other hydrocarbons, which include butane and propane, as a source of benzene contamination. Hydrocarbons are petroleum distillates, produced by refining crude oil, and benzene is known to be present in petroleum.

Butane and propane are powerful propellants, making them hard for companies to resist, said Ghasem Nasr, professor in the School of Science, Engineering and Environment at the University of Salford in England and an expert on spray technology. In fact they’re 1,700 times stronger than compressed gases, such as nitrogen, according to Nasr. Nitrogen, an inert gas which Guinness uses to make its canned beer taste like it was just poured from the tap, is considered more environmentally friendly than butane and propane.

Nasr, the founder of Salford Valve Company Ltd., invented the company’s Eco-Valve, an aerosol valve that makes nitrogen more attractive as a propellant for personal-care products. Beiersdorf put out a statement earlier this month detailing its new use of the “more climate-friendly aerosol valve system” with its Nivea brand deodorants.

Whatever the source of the contamination, the FDA’s rules on benzene still aren’t clear. While the agency is asking companies to recall products that contain more than 2 parts per million of benzene, the international guidelines the FDA follows only allow for that amount if “use is unavoidable in order to produce a drug product with a significant therapeutic advance.” The FDA did not respond to a question about why they were allowing any amount in products that, as Valisure testing showed, can be made without the carcinogen.

“It’s interesting how many aerosols did not contain benzene,” Orris said. “It appears they can construct these without benzene.”

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[FinlayS00]

See what @SFLMaven CEO Joseph Ladin said about the Christmas Sale!!

$SFLM CEO Joseph Ladin says, “This is the weekend that it’s either now or never, for Christmas time, we try to pour on as many extras as we can to try to showcase as many pieces as possible to our customers. We go out on a limb and we increase our volume.”

https://www.jckonline.com/editorial-article/jewelers-kick-off-black-friday/

[FinlayS00]

$SFLM - @SFLMaven SEES BOOST IN PERFORMANCE METRICS ON SEASONAL AND SUPPLY CHAIN TAILWINDS! Do you know that SFLM total sales went up 42% year over year?

https://facebook.com/sflmaven/photos/a.220871541588248/1596906823984706/

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>>> Bear of the Day: Kimberly Clark (KMB)


Zacks

Madeleine Johnson

August 26, 2021


https://finance.yahoo.com/news/bear-day-kimberly-clark-kmb-100810728.html


Founded in 1928, Kimberly Clark Corporation KMB is a well-known global consumer products manufacturer. Its brand portfolio includes Huggies, Pull-Ups, Kleenex, Scott, and Cottonelle.

Q2 Earnings Weaker-Than-Expected

Even though slowing growth was expected this year, Kimberly Clark’s Q2 performance showed a slowdown more intense than management had foreseen.

Organic sales fell 3%, and sales volumes were down 4%. Prices increased only 1%.

Gross profit slumped 17% year-over-year, while net income declined 45% compared to Q2 2020. Cash flow was also down sharply, though KMB’s balance sheet has improved compared to 2019.

"Our second quarter reflects continued pandemic-driven volatility," CEO Mike Hsu said in a press release. "We are facing significantly higher input costs and a reversal in consumer tissue volumes from record growth in the year ago period."

Bottom Line

KMB is now a Zacks Rank #5 (Strong Sell).

Five analysts have cut their full year earnings outlook over the past 60 days, and the consensus estimate has fallen 68 cents to $6.73 per share. Wall Street has lowered its earnings picture for 2022 as well, but the bottom line is still expected to post year-over-year growth.

Shares have struggled to gain traction so far in 2021. Year-to-date, KMB is down 13.7% compared to the S&P 500’s gain of 31%.

Looking ahead, Kimberly Clark cut its outlook across the board, reflecting 2021’s tough selling environment.

Sales are now expected to fall about 1% for the fiscal year compared to the prior outlook of less than 1% growth. The company’s bottom line will also take a hit as the consumer staples giant tries to balance price hikes against decreasing sales volumes.

The short-term picture for KMB looks pretty gloomy as it tries to find its footing in this stage of the coronavirus pandemic. But for investors, any price pain will be healed by KMB’s juicy dividend, which sports a yield of 3.4%.

Investors who are interested in adding a consumer staples stock to their portfolio could consider online pet food and accessories Chewy CHWY. CHWY is a #1 (Strong Buy) on the Zacks Rank, and the Zacks Consensus Estimate has jumped to $0.12 a share, representing 33.3% growth, for fiscal 2021.


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Clorox - >>> Earnings: When a Big Brand Isn't Enough


"It's the hope that kills you."


Motley Fool

by Chris Hill

Aug 16, 2021


https://www.fool.com/investing/2021/08/16/earnings-when-a-big-brand-isnt-enough/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


Clorox (NYSE:CLX) ends its fiscal year with a whimper, not a bang. Under Armour (NYSE:UAA)(NYSE:UA) shares rise on a strong second quarter and there are reasons for optimism. Gartner (NYSE:IT) pops more than 10% on its own strong second quarter. In this episode of MarketFoolery, Asit Sharma analyzes those stories and shares why having a good brand is helpful, but not always enough.

This video was recorded on August 3, 2021.

Chris Hill: It's Tuesday, August 3rd. Welcome to MarketFoolery. I'm Chris Hill. With me today, our man in North Carolina, Asit Sharma. Thanks for being here.

Asit Sharma: Hey, Chris. Thanks for having me. It's good to wipe the clean slate with a new day, referring with a little bit of foreshadowing to a certain company that we're going to talk about that specializes in disinfecting wipes, among other products. But good to be with you once again.

Hill: Absolutely. We've got athletic apparel, we've got the sexy world of research, but we're going to start with what turns out to be a rough end to the fiscal year for Clorox. Shares are falling more than 10% this morning after fourth quarter profits and revenue came in lower than expected. I was saying to you right before we started, the past, let's just call it six to nine months and maybe even a year, it really hasn't gone as well for Clorox as I would have guessed.

Sharma: Yeah. Same here, Chris. I actually thought last year that Clorox was going to have some sticky advantages coming out of COVID. We've seen a lot of companies that have taken the benefit of all the sales from the spring and summer of last year and they've parlayed those into longer term advantages; Clorox, not so much. We have to understand here that Clorox doesn't really face the retail world. It applies to retail outlets. It's a consumer packaged goods company so it doesn't have a lot of opportunity for, say, huge direct e-commerce sales. You have to grant them that. On the other hand, this was really a chance to get in front of customers and re-associate them with the brand. Because of a few thorny problems, like supply chain logistics, rising commodity costs, etc, Clorox hasn't been able to capitalize on customers remembering how much they relied on the company for household products. I want to read this quote from this morning's press release from CEO Linda Rendle, give my quick comments on that, "Fiscal year 2021 was an extraordinary year for Clorox with the pandemic putting us through the test of volatility, including rapid changes in consumer demand and inflationary pressure which is reflected in our fourth quarter results."

Now, those fourth quarter results include a 9% decrease in sales year-over-year, 10% on an organic basis, and earnings per share slipped 68% to 78%. I have to say that everything that CEO Linda Rendle said is true for Clorox, but it's true for all of its competitors. It's true for so many other companies in the consumer goods world, and not to save the tech world, manufacturing; that's everyone's experience. Yes, the pricing results and shareholders are punishing the stock today. This is the second or third quarter where I feel they've underwhelmed with results. What do you think, looking forward, I was curious, Chris, you have such a good long-term view of companies, you're a very stable investor, does this change your opinion of Clorox or do you think, maybe, hey, I buy now, they'll work through these problems, it's great brand, great company?

Hill: You look at the stock down 30% over the past year and the long-term record of Clorox paying a dividend. I could see some investors looking at the drop today, the recent past. If you're looking for a dividend payer, and not everybody is, but if you are, you could do worse than Clorox. Again, it's 10% cheaper today than it was yesterday. That being said, a part of me wants [laughs] to do a deep dive and investigative research and just be like, what is wrong with the execution of the business? Because as you said, they're not facing any headwinds that any of their other competitors aren't already facing as well. They're the name brand leader in their category. They have built-in advantages. A part of me just wonders what is happening on an execution level that they are struggling like this? I get that there could be an argument that, hey, look, this is a stock that got ahead of itself. It had a run-up in 2020 that it probably didn't deserve, at least in historical terms. You can convince me of that. But I don't know. Again, it goes on the list for if you're looking for a dividend payer, but I think that's the only list that goes on.

Sharma: This becomes a problem as we move out of COVID because in this world of consumer packaged goods, you have to have a little bit of income growth, you have to have a little bit of revenue growth, you have to stay ahead of inflation. No one expects a multinational conglomerate that competes in this space to deliver huge double-digit revenue acceleration. That's not going to happen. But you have to show shareholders that we are solid-state, we'll be able to pay out that dividend and raise it. This brings up some short-term questions. On that execution front, they did mention in the press release today that they've delivered over $120 million in cost savings in the fiscal year. That e-commerce business, which I was talking about, that's never going to be a huge portion of the business; they did double that business over the past two years. They're doing all the right things: working with data personalization, more customer engagement. But I think that maybe they need even a higher focus on whatever management decides those growth drivers truly are. If it is the e-commerce, if that's part of it, double down on that investment, but find the levers that will bring you into a little bit better of earnings complexion and certainly a top-line outlook going forward.

The last thing I'll say on this, the company just disappointed the investors not just with these earnings, but with their outlook. They're calling for a 2-6% decrease in sales for fiscal year 2022 and earnings per share of only $5.40-$5.70, which never gets too hung up on earnings per share in one given year, but that's well below what most people were expecting for the year. We'll have to see how they can get some momentum in the next couple of quarters. Hopefully, we can revisit this later this year.

Hill: Under Armour's second quarter profits and revenue came in higher than expected. Unlike Clorox, Under Armour actually increased revenue guidance for the full fiscal year and shares are up more than 6% this morning. This, I say, is a relatively longtime shareholder. This makes me nervous. It makes me nervous for the following reason; that I believe Patrik Frisk, the CEO, when he says this year sets the foundation and this is putting us in a good place for what he calls our next chapter of profitable growth. On the surface, it really does seem he's not just blowing smoke. That's what makes me nervous because it's getting my hopes up.

Sharma: I've been a skeptic of Under Armour for several quarters and I have to admit that Patrik Frisk is growing on me. He is executing. Patrik Frisk has been with Under Armour since I believe around 2017, that's right. In a short amount of time, he was really promoted up into the CEO role. That was the beginning of 2020. Shortly thereafter, he instituted a pretty major cost-cutting reorganization plan. In today's earnings release, the company recapped what's happened since last year. They have recognized about $483 million in pre-tax charges related to this restructuring plan, out of an estimated 550-600 million bucks. In other words, they have, with all speed, reorganized the business. I think it is showing in these results, we should say, take these numbers with a grain of salt, which I'm about to read out because they reflect comparisons against the period last year when many of the stores were still closed, but revenue was up 91% year-over-year.

Their North American business increased 101%, so that doubled. They even were able to increase gross margin to 49.5%. That's not a huge jump, it's 20 basis points or one fifth of 1% over the last year. But it shows a little bit of operating leverage, or at least a stable gross profit equation. I like all of this and restructuring charges, only $3 million in the quarter. The bulk of all of that work is getting behind them, Chris. I guess you almost have to get your hopes up here. Everything I looked at this morning, I was pleased with, operating income was $121 million. The bigger picture here is, we knew that Under Armour needed to execute. We could see that they probably would after Kevin Plank took a back seat and got out of that driver's chair. The question was, would they be able to execute and still maintain some of their brand cache in the market? I think it has held up. For all the negative articles that have come around about Under Armour's missteps with their brand, it's still out there. I think the younger generation still sees it as an aspirational brand. Maybe they have the equation down right here, Chris, and you can breathe a sigh of relief. What do you think?

Hill: But just on an operational level, and this is part of what Frisk and his team have been doing. You look at their results, and it's clear that they are relying less on discounting. They are doing more in terms of direct-to-consumer. It's taken a while, but from a strategic standpoint, they finally appear to be moving in the right direction. On the flip side, the stock is where it was four years ago. It's dipped and bounced back up, but it is right there in the low-20s like it was in the summer of 2017. Part of me just thinks about the great line from Ted Lasso, "It's the hope that kills you." I'm trying not to get my hopes up too much about this. But I've had years of practice of having my hopes dashed by this business. Maybe I'll be pleasantly surprised at this point.

Sharma: That hope muscle is toughened, Chris. Let me play skeptic for just a second here. The other side of this equation is the fact that Under Armour still has to go out and compete every day with the Nikes and the Adidas' of the world. It has to compete with a host of companies that are in the athleisure market. Almost everywhere this company looks, there is fierce, never-ending competition. But I like their balance sheet now. I like the way their cash flows have improved. They've got a little bit of ammunition now to try to maybe claw back a few nice super athlete endorsements if that's part of the equation, but store expansion for them would be great. Introduction of new brands which they've been rolling out, I think continue with that.

Again, we will see there is a spot for Under Armour in this fight among these major brands when you look at the athletic part of the market. There's a spot for it in the athleisure, the connected fitness areas that it's exploring. It's just that they've got to always do both things at once. They have to keep that brand strong. We have to execute under current management. I think you have both. I think they can sustain the brand and I think they can execute. Keep that muscle under a good regular fitness regimen. Chris, it'll work out.

Hill: Shares of Gartner are up more than 10% today, this is the global research and advisory firm. Second quarter revenue up 20%,profits were higher than expected. This was one that you brought to my attention. What is it about Gartner that interests you as an investor?

Sharma: The biggest thing that interests me about Gartner is the fact that it's a $25 billion company in terms of market capitalization. Revenues for the quarter that they just reported on were $1.2 billion. This is not a small company, and yet they're growing like a much smaller scrap your upstart in a space in the technology world, which is very difficult to even wade in this water. Gartner basically gets its money from providing research to companies and executives, to providing consulting on technology and holding conferences. These are its three major business lines. It's not a type of company that immediately comes to mind as a great Software-as-a-Service play. But in some ways, that's exactly what it is because it sells its biggest revenue stream as a subscription. That's the research it provides. I also like that Gartner has an incredibly well-known brand name. If you've done any research at all in the tech space and you're trying to figure out as an investor, which is the dominant company in this particular technology sphere that I'm looking at? Who is the No. 2? Who is the No. 3? Then you're familiar with this visual called the Gartner Magic Quadrant, where they show where the industry leaders are in a certain sector, where the challenges are.

They have a number of other branded reports that investors look at it and pay for. The brand name is very strong in the tech world. But as an investor, you look at Gartner and it's almost like an afterthought, they're the people who rate these other technology companies. Yet here we see in this latest quarter, just very strong revenue growth, very strong profit growth. Revenues grew 20% to that $1.2 billion. Net income was up almost 85% to $271 million. They had free cash flow of $563 million. That's up 75% year-over-year on that $1.2 billion in revenue. It's got a lot of characteristics that are very appealing. If I gave you a lot of these stats and told you it was a subscription business, but maybe introduced it as a specialized SaaS software company. I think most investors would be really excited when I say the name Gartner, interest subsides, but here they are, I think up over 8% this morning with the second-quarter report. Last thing that I want to mention just as we begin to talk about it, is their total contract value, which is like their version of annualized recurring revenue, was up almost 11% year-over-year to $3.8 billion. They have a very nice base of recurring revenue. It's another thing that you want to see in a company like this.

Hill: You touched on something that I think is really important. You said a bunch of things that I think are important, but one that I think gets overlooked is, for lack of a better term, the casual reputation of Gartner as this legacy, boring business. It's easy for me to imagine older investors who work with a financial advisor. If this stock comes up, the client is almost waving their hand away, as you said like, "Oh, yeah, the people who do the reports, I know them." Look, there's a bias against businesses like this. There's a bias against businesses like Clorox. It's like, "Wait, they do what? Oh, yeah, they make the bleach. That's it." There is almost an inherent bias against boring businesses. But as you said, you look at the growth and it is one of those situations where you're like, "How big is the market cap of this company?"

Sharma: Absolutely. One of the things that all three companies that we've talked about today have in their back pocket, is a really strong brand. We were talking about this a few minutes ago. Gartner, that brand is so important because the people that buy the services are executive level, and they will pay good money for great research. That's where that billion dollars of revenue in one quarter just from providing subscription-based research comes in. As investors, we often get distracted, and rightfully so, in the latest technology. Show me the software-as-a-service company that is specializing in artificial intelligence and machine learning and it's doing all of these wonderful things in the world. It's an innovator. I want to put my money in that company. It's going to grow at this amazing rate. We often will ignore companies that are capitalizing on an everlasting brand and are turning out great results quarter-after-quarter-after-quarter. Now that's to our detriment. Chris, we were talking about this last week and I was beating myself up further. I think yesterday I happened to pull up a chart of Home Depot over the last 10 years. You wouldn't think that's an 1,100% total return in a 10-year period, but there you have it. Yeah, I think that this is important for investors who want to stabilize a part of their portfolios and maybe balance out more riskier elements in newer companies that are infused with growth potential. You've got some quality names like Gartner that won't hurt you to buy and hold. You don't have to bet the form on these, but just to provide some balance and not bad balance, this is good balance. This is a company that itself is growing at a double-digit rate. Why not? Ii is the last thought. Why not Gartner?

Hill: Asit Sharma, loved talking to you. Thanks for being here.

Sharma: Thanks so much, Chris. Fine, as always.

Hill: As always, people on the program may have interest in the stocks they talk about and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. That's going to do it for this edition of MarketFoolery, the show's mixed by Dan Boyd. I'm Chris Hill. Thanks for listening. We'll see you tomorrow.

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>>> Church & Dwight (CHD) Gains on High Demand Amid Cost Concerns


Zacks Equity Research

August 25, 2021


https://finance.yahoo.com/news/church-dwight-chd-gains-high-114411464.html


Church & Dwight Co., Inc. CHD has been benefiting from consumers’ rising demand for its products, especially amid the pandemic-induced at-home consumption. The company’s robust brands, backed by focus on innovation and buyouts, have been helping it make the most of such trends. Apart from this, the company’s online sales have been rising. Such upsides fueled Church & Dwight in second-quarter 2021, wherein the top and bottom lines increased year over year and beat the Zacks Consensus Estimate.

However, the company is battling supply-chain headwinds, which weighed on its sales guidance. It is also encountering escalated input costs, which are likely to linger through 2021. Together, these factors dented management’s earnings view. We note that on its last earnings call, management curtailed its sales and earnings view, though the figures still suggest year-over-year growth. Let’s delve deeper.

Pandemic-Led Demand a Driver

In second-quarter 2021, net sales of $1,271.1 million advanced 6.4% year over year and topped the Zacks Consensus Estimate of $1,255 million. Church & Dwight continued to witness robust consumption in the quarter. The company saw consumption gains in 13 out of 16 domestic categories, such as gummy vitamins, dry shampoo, water flossers and cat litter. The company’s personal care category is gaining on higher consumer mobility. The international business saw a broad-based organic sales improvement despite a number of countries undergoing lockdowns. Although management lowered its sales and organic sales guidance for 2021 due to supply-chain headwinds, the view still suggests year-over-year growth. It now expects reported sales growth of roughly 5% compared with the 5-6% rise anticipated earlier.

During the quarter, organic sales rose 4.5%, fueled by volume gains. Organic sales are expected to rise nearly 4% in 2021, though it was projected to be up 4-5% earlier. For the third quarter of 2021, organic sales are projected to rise nearly 1.5%. Moving on, Church & Dwight’s e-commerce sales have been playing a strong role amid the pandemic, backed by consumers accelerated online shopping preferences. During second-quarter 2021, global online sales increased 7.2% and formed 14.2% of the quarterly sales. For 2021, the company estimates online sales to form 15% of the total sales.

Brand Strength Aids

Church & Dwight has strengthened its brand portfolio with robust innovation and lucrative buyouts. Management considers innovation to be a major growth driver, and is encouraged about its 2021 product launches. The company launched OXICLEAN Laundry and Home Sanitizer in its household products portfolio. In its personal care products space, VITAFUSION introduced Elderberry gummies, Triple immune gummies, and Power Zinc gummies to make the most of consumers’ growing inclination toward boosting immunity. Additionally, WATERPIK came up with WATERPIK ION, which is a water flosser. FLAWLESS is also focused on capitalizing on increased at-home beauty and selfcare trends — with at-home manicure and pedicure options.

Talking of buyouts, the company took over Matrixx Initiatives in December 2020, which owns the ZICAM brand. Zicam is a leading zinc supplement in the United States in the vitamins, minerals, and supplements (VMS) cough/cold shortening category. Apart from this, the buyouts of FLAWLESS and WATERPIK have been prudent additions to Church & Dwight’s portfolio, which are also key subsidiaries of the company. In the Consumer Domestic unit, WATERPIK consumption soared 72% in the second quarter, on the back of consumers’ heightening focus on health and wellness, and rebound from the pandemic-induced lows.

Key Headwinds

During the second quarter of 2021, Church & Dwight encountered shortage of several raw materials. Apart from these, the company is facing supply-related hurdles due to labor shortages and transportation hiccups. Gross margin shrunk 340 basis points (bps) to 43.4% due to elevated distribution costs and increased manufacturing costs, largely owing to commodities and elevated tariffs. The company further stated that it pulled back on marketing in the second quarter for certain products, mainly household products, due to a reduced case fill rate.

Management expects escalated input and transportation costs for the rest of 2021. Its gross margin guidance reflects considerable material and component cost inflation. Management now expects additional input costs of $125 million for 2021 compared with the $90 million expected before. However, this is likely to be partly negated by reduced coupons and promotions, lower SG&A and the announced price hikes. Church & Dwight has been on track with its pricing efforts to counter commodity, labor and transportation cost hikes. That said, full benefit from pricing actions will only be experienced in 2022. Gross margin in 2021 is expected to contract 75 bps compared with the earlier view of being flat year over year.

Management curtailed its earnings view due to elevated input costs and the timing lag of pricing actions. It now expects 2021 adjusted earnings per share growth to be at the lower end of its previously-issued range of 6-8%. The company projects adjusted operating margin to expand 70 bps now compared with the 80 bps anticipated before.

That said, the above-mentioned upsides are likely to help this developer, manufacturer, and marketer of household, personal care, and specialty products, keep its growth story going. Shares of the Zacks Rank #3 (Hold) company have gained 6.2% in the past six months compared with the industry’s growth of 1.3%.

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Procter & Gamble - >>> What Investors Missed in Procter & Gamble's Latest Earnings

P&G is looking even more attractive as growth slows following the pandemic spike.


Motley Fool

by Demitri Kalogeropoulos

Aug 11, 2021


https://www.fool.com/investing/2021/08/11/what-investors-missed-in-procter-gambles-latest-ea/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


Key Points

Sales growth is staying elevated despite earlier pantry-stocking.
Margins are up, and cash flow is surging.

P&G sees a few big risks ahead, including spiking raw material costs.

Shares of Procter & Gamble (NYSE:PG) have been shunned during the market rally despite impressive operating results from the consumer staples titan. But P&G just keeps on getting stronger, even if Wall Street hasn't noticed.

The company just closed out another great fiscal year of market share growth coupled with solid financial metrics like cash flow and profitability. Let's look at three highlights from that performance.


1. It's not done growing

Investors have been worried about a growth pullback, and that's happening today. Sales gains slowed to 4% in the fiscal fourth quarter, which ended in June, compared to 7% for the wider fiscal year. P&G also posted some of its weakest volume growth since the pandemic started.

But the company is still growing compared to a booming prior-year period. It didn't suffer from as much of a demand hangover as rivals, either. While Kimberly Clark (NYSE: KMB) reported falling sales and declining volumes, P&G is winning share and attracting more customers in key niches like fabric care, skin care, and home cleaning supplies.

"Growth was broad-based across business units," CFO Andre Schulten said in a call with Wall Street analysts, "with each of our 10 product categories growing or holding organic sales [in fiscal 2021]." Sure, sales fell 1% in the U.S. market. But that's compared to a 19% spike a year ago as pantry stocking hit an unprecedented level.

2. Innovation matters

P&G's ability to consistently raise the bar on its products allows it to deliver faster growth and stronger profitability than its peers. While margins shrank this quarter due to inflation, those drops were smaller than what Kimberly Clark suffered. Average prices rose, too, in part thanks to a consumer trade-up to popular, premium offerings across the portfolio.

CEO David Taylor said a new NyQuil launch was a prime example of that process at work. "NyQuil Honey is the No. 1 new item in the U.S. respiratory market, and our Vicks share is up 90 basis points over the past 12 months despite the soft market due to the very weak cough-cold season."

Investors can see evidence of that innovation leadership mainly in P&G's market-thumping profitability. The company is careful to compete only in the most attractive niches that can lift margins through product improvements.

3. The risks ahead

P&G sees several major risks ahead that might make fiscal 2022 just as difficult as 2021 was in many ways. "Raw material and transport costs have risen sharply," Taylor said, and "increased social unrest and economic distress in many parts of the world are putting pressure on local GDP growth." The pandemic is still limiting consumer mobility and retailing and supply chains, too.

The company is still confident that it can grow sales by between 2% and 4% this year after last year's 7% spike. Kimberly Clark, for context, recently projected flat organic sales in 2021.

Executives see an enduring post-pandemic lift for several key categories like health and hygiene and home maintenance, which should help P&G outgrow the industry even after the COVID-19 threat ends. Investor returns will be further amplified by a rising dividend and stock repurchase spending, which together should land at about $16 billion in fiscal 2022.

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Diversey Holdings - >>> This Cleaning Stock Is Loved by Analysts. Why They Say It Could Gain 40%.


Barron's

By Al Root

April 19, 2021


Wall Street is surprisingly high on a new cleaning stock.

Diversey Holdings (ticker: DSEY) provides cleaning chemicals, equipment, and services for industrial and commercial hygiene. Diversey, founded in 1923, was once part of Sealed Air (SEE), which sold the unit to private equity firm Bain Capital in 2017 for about $3.2 billion. Bain cut costs, improved margins, and brought the company public again this past month. Despite weak trading out of the gate, Wall Street almost uniformly recommends buying Diversey stock.

Diversey’s IPO qualifies as a broken deal. That means the stock is trading below its $15 IPO price, not something bankers want to see. Shares closed at $14.98 in their first day of trading. And shares are still trading lower: On Monday, they closed at $14.04.

Ecolab (ECL) is the closest comparable company to Diversey. Diversey’s market cap is roughly $4.3 billion. Ecolab, with its $63 billion valuation, is far larger.

Eight of the nine analysts who launched coverage of Diversey on Monday rated shares Buy. The average price target for Buy-rated analysts is about $19.50 a share, almost 40% above where the stock currently trades.

Those nine ratings arrived on Monday because the brokerages that launched coverage were involved in the IPO. Rules prevent participating brokers from launching coverage of a stock immediately after the public offering.

Barclays' Manav Patnaik was the lone analyst who rated shares Hold, making him all that stood between Diversey and a perfect 100% Buy-rating ratio. Still, his price target for shares is $16, a dollar higher than Diversey’s IPO price.

Baird analyst Andrew Wittmann was one of the Buy-rated analysts who launched coverage on Monday. He said in his initiation presentation that 90% of Diversey sales come from consumable products and most of the company’s products are low costs items that help customers save resources and money.

His target price is $18 based on about 31 times estimated 2021 earnings. Ecolab, for comparison, trades for about 43 times estimated 2021 earnings. Ecolab, of course, is the 800-pound gorilla in the corporate hygiene market. Plus, it has less debt than Diversey does. Being larger and less levered is one reason Ecolab has a higher valuation multiple. Still, with Diversey stock trading at about 24 times Wittmann’s estimated 2021 earnings, he sees an opportunity.

Most of Wittmann’s peers agree but, despite the bullish views, Diversey stock was down 2% in Monday trading. The S&P 500 and Dow Jones Industrial Average fell 0.5% and 0.3%, respectively.

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>>> Diversey Holdings, Ltd. (DSEY), through its subsidiaries, provides infection prevention and cleaning solutions in Europe, North America, Latin America, the Asia Pacific, the Middle East, and Africa. It operates through two segments, Institutional, and Food and Beverage. The company manufactures, markets, and sells infection prevention and personal care products; floor and building care chemicals; kitchen and mechanical ware wash chemicals, and machines; dosing and dispensing equipment; and floor care machines to healthcare, education, food service, retail and grocery, hospitality, and building service contractor industries. It also provides a range of engineering, consulting, and training services related to productivity management, water and energy management, and risk management. In addition, the company offers chemical products; engineering and equipment solutions; training; and knowledge-based services, as well as water treatment services to brewing, beverage, dairy, processed foods, pharmaceutical, and agriculture industries. Diversey Holdings, Ltd. was founded in 1923 and is headquartered in Northampton, United Kingdom. <<<

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Clorox - >>> Analyst Sees 34% Upside in Clorox Stock as Sales Growth Accelerates

Wall Street's estimates for sales growth could "prove conservative."


Motley Fool

by Rich Duprey

Nov 27, 2020


https://www.fool.com/investing/2020/11/27/analyst-sees-34-upside-in-clorox-stock-as-sales-gr/


Despite industry data showing Clorox (NYSE:CLX) sales are accelerating both sequentially and year over year, an analyst is maintaining her price target of $268 per share on the household products maker. However, that does suggest 34% upside to where the stock currently trades.

Shares of Clorox are down 16% from the all-time high they hit in August, but they remain 30% above where they started 2020, and rising cases of COVID-19 suggest sales will accelerate further.

Growing by leaps and bounds

Clorox reported organic sales shot 27% higher in its fiscal 2021 first quarter and profits doubled. Not only were sales of its disinfecting wipes soaring, but consumers were still choosing to cook more at home than going out to eat. As a result, the grilling business of its household goods segment saw sales double. (Clorox owns the Kingsford brand of charcoal.)

D.A. Davidson analyst Linda Bolton Weiser apparently sees that trend continuing. She points to IRI data that shows sales for the four-week period ending Nov. 15 jumped 21.6% compared to the year-ago period, and they was higher than the 18.5% gain seen in October.

Weiser has put out her own estimates for December sales growth of 15% but admits that figure could "prove conservative."

The second wave of coronavirus cases that was expected seems to be washing across the country, and states are beginning to lock down again, imposing more restrictions on businesses. Supermarkets are also seeing more panic-buying occurring again -- a feature of the first wave of the COVID-19 outbreak when it was declared a pandemic.

Clorox has had difficulty keeping up with demand and has said the supply of disinfecting wipes would not reach equilibrium until 2021.

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>>> Why Procter & Gamble Is a Retiree's Dream Stock

This consumer staples name offers well-balanced potential for reward at a minimal amount of risk.


Motley Fool

by James Brumley

Nov 28, 2020


https://www.fool.com/investing/2020/11/28/why-procter-gamble-is-a-retirees-dream-stock/


No single stock is perfect in every possible way. Dividend payments made to shareholders could be instead be invested in growth. Companies that do exceedingly well in periods of economic strength usually struggle during an economic contraction. Picking stocks is ultimately about managing trade-offs.

If there was only one near-perfect pick for retirees, however, it would arguably be Procter & Gamble (NYSE:PG).

Not ready at the time

Anyone reading this likely knows Procter & Gamble is the name behind popular consumer goods such as Tide laundry detergent and Bounty paper towels. What they may not fully appreciate is the full breadth and depth of P&G's portfolio. Crest toothpaste, Pepto-Bismol, Febreze, Old Spice, Gillette, and Pampers are also part of the Procter family.

These are all goods people constantly consume and replenish, often buying the same brand over and over again.

Those who know Procter & Gamble's recent history also know, however, that the company didn't quite keep its finger on the pulse of consumerism early on in the 21st century. The world wide web democratized pricing, promoting, and eventually, purchasing, giving rise to niche competitors that took a competitive toll. Dollar Shave Club and Harry's, for example, ate into Gillette's market share by circumventing the retailers that Procter & Gamble continued to cultivate after it acquired the Gillette brand in 2005.

It was a microcosm of the fact that P&G just wasn't equipped for the new normal that took shape in the early 2000s. Perhaps it was too big and too stuck in its old pre-internet ways for its own good.

Underscoring this lack of readiness was the company's decision to sell a big part of its beauty business to Coty in 2016, rather than attempt to revive those products' sales. Some of those brands -- like Clairol and Wella -- had only been brought into the Procter fold a few years prior, and seemingly never got the shot or guidance they deserved.

New and improved

Much has changed in just the past few years, particularly since David Taylor took the helm as CEO in 2015. Chief among the changes he's driven is a relatively new affinity for consumer data, and using that data to connect with consumers on the web.

He referred to it as propensity marketing a little over a year ago, simplifying the company's newly learned capacity to "reach the right people at the right time at the right place." That approach utilizes the internet a whole lot more, and other forms of marketing a whole lot less. In conjunction with the overhaul of Procter's promotional program, Taylor culled some of the ad agencies it had worked with in the past too, en route to a target savings of $2 billion per year. Taylor touts the company's "stronger media delivery [and] stronger programs at lower cost." The company's even buying its way into new digital markets. In January, it acquired women's body care brand Billie, which is a direct-to-consumer brand that can make good use of P&G's new data-driven marketing program.

The new formula seems to be working. Although boosted a bit by coronavirus shutdowns, last quarter's e-commerce revenue grew a stunning 50% year over year. Online sales now account for around 12% of total revenue, basically doubling e-commerce's effect on the top line from a couple of years ago.

What didn't change was P&G's interest in innovation, although under Taylor the company's been able to do more of it. In something of a shakeup of the company's corporate culture, he's encouraged risks without necessarily punishing failure. New product concepts unveiled at January's Consumer Electronics Show range from the curious -- like Gillette's heated razor -- to the downright bizarre, like a robot that delivers toilet paper.

Not every innovation will find its way into stores, but clearly the company is considering all possibilities.

Connecting the dots

As for how this matters to retirees, Procter & Gamble still offers consumables to shoppers familiar with its brands. What's changed for the better is the company's ability to connect with those consumers in a way that's most relevant to them...a key business component P&G didn't even appear to know it was overlooking before Taylor took over.

With all the right levers finally in place, Procter has quietly moved back into a position of strength within the consumer staples market. As fellow Fool Daniel Sparks noted last month, new buying habits formed because of the COVID-19 pandemic look like they're going to stick around even once the contagion is in the rearview mirror.

Of course, it would be short-sighted to not look past the fact that the company's highly marketable product base will not only help pay P&G's dividend, but allow the organization to start improving its payout growth. The company may have upped its payout every year for the past 64 years, but the increases haven't exactly been thrilling of late compared to earnings progress.

Procter & Gamble (PG) revenue and earnings should start to significantly outpace dividend growth.

Bottom line: Procter & Gamble offers a healthy balance of almost everything a retiree could want in a stock. That's recession-resistant results, steady income that should outpace inflation, a way to participate in the consumer goods market's rising tide, and a chance to participate in any market share gains the company may achieve in the near future. It's an attractive mix of risk and reward that's tough to find with a lot of other stocks.

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>>> Unilever Finalizes Shift to a Single, U.K.-Based Company


Yahoo Finance

by Samantha Conti

November 30, 2020


https://finance.yahoo.com/news/unilever-finalizes-shift-single-u-103631960.html


LONDON – It’s official. Unilever has become a single company headquartered in Britain and trading under the name Unilever plc.

On Monday, the beauty-to-food giant said the unification of its its group legal structure under a single parent, Unilever plc, was complete.

From Nov. 30, and for the first time in its history, Unilever will be trading with one market capitalization, class of shares and global pool of liquidity, while also maintaining its existing listings on the Amsterdam, London and New York stock exchanges.

Nils Andersen, chairman of Unilever, said it was an important day for Unilever, “and we would like to thank our shareholders for their strong support of our unification proposals, which give us greater flexibility for strategic portfolio change, remove complexity and further improve governance.”

The company pointed out there would be no change to the operations, locations, activities or staffing levels in either the Netherlands, where its second legal headquarters was until last week, or the U.K. as a result of the unification.

The headquarters of Unilever’s Foods & Refreshment Division will continue to be based in Rotterdam and the Home Care and Beauty & Personal Care Divisions will continue to be headquartered in the U.K., the company said.

Unilever had been owned through two separately listed companies, a Dutch NV and a UK plc, since its formation in 1930. The corporate giant had always argued that both companies operated “as nearly as practicable as a single economic entity.”

Dealings in new Unilever plc shares begin Monday on the London Stock Exchange, Euronext Amsterdam and the New York Stock Exchange.

New Unilever plc shares will be admitted to the Premium Listing segment of the Official List of the U.K. Financial Conduct Authority and to trading on the London Stock Exchange’s main market for listed securities with the ticker “ULVR” on Monday morning.

Unilever plc shares will also be admitted to listing and to trading on Euronext in Amsterdam, a regulated market of Euronext Amsterdam N.V., under the ticker “UNA” this morning. It is expected that Unilever plc shares will be admitted to trading on the New York Stock Exchange later on Monday.

The company said that Unilever NV, the Netherlands arm of the company, ceased to exist on Sunday, Nov. 29, as a result of which there have been no dealings, and will be no further dealings, in any Unilever NV securities since that date.

The company said the total number of shares with exercisable voting rights in Unilever plc is 2,627,860,535.

In June, Unilever said it was simplifying its legal structure in order to create “a simpler company with greater strategic flexibility that is better positioned for future success.”

It said that after a “comprehensive review” which began in 2019, the board continues to believe that moving from the dual-headed legal structure to a single parent company will bring significant benefits.

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Clorox - >>> 3 Recession-Ready Stocks to Buy Right Now


https://www.fool.com/investing/2020/10/29/3-recession-ready-stocks-to-buy-right-now/


Consumer staple companies like Clorox can be one of the safest investments during a recession. Unlike most sectors of the stock market, which more or less rely on a growing economy to fuel their sales growth, demand for Clorox's products is consistent despite the market cycle. Generally speaking, this means that consumer staple stocks will underperform a bull market but outperform a bear market.

Demand for Clorox's products is soaring, and it's not just wipes and bleach. The company's Clorox Total 360 System disinfects surfaces and has been approved by the EPA to kill the virus. Major U.S. airlines like United Airlines are using Total 360 to clean their planes after most flights.

Despite all of the challenges facing the stock market this year, shares of Clorox are up close to 40%, significantly outperforming the market. Clorox's Fiscal Year 2020, which ended on June 30, 2020, reported an 8% increase in total sales, a 16% increase in diluted earnings per share, and a 170-basis point increase in gross profit margin to 45.6%. The success was largely driven by Clorox's health and wellness segment.

Although Clorox expects a flat to low-single-digit revenue increase in Fiscal Year 2021, the fundamental strength of the company's business gives it recession resilience. Clorox is also a Dividend Aristocrat, having increased its dividend for 43 consecutive years. The stock yields 2.1% at the time of this writing.

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Clorox - >>> 3 Things You'll Want to Know When Clorox Announces Earnings

The international manufacturer of cleaning products announces its first-quarter results on Nov. 2.


Motley Fool

by Parkev Tatevosian

Oct 30, 2020


https://www.fool.com/investing/2020/10/30/3-things-youll-want-to-know-when-clorox-announces/


Clorox (NYSE:CLX), the maker of some of the most recognized consumer brand name products, is benefiting from the surge in demand due to the coronavirus pandemic. Its cleaning and disinfecting items are in high demand in this coronavirus-induced pandemic. In fact, several of its products, including Pine-Sol, Clorox Disinfecting Wipes, and Clorox Wet Mopping Cloths, have received approval for COVID-19 kill claims from the Environmental Protection Agency. The company expects to report solid results when it releases its first quarter earnings for fiscal 2021 on Nov. 2. Here are three important metrics investors should focus on in its Q1 report.

COVID-19 is increasing sales for Clorox

Investors will first want to keep an eye on the company's overall revenue growth. The top line increased 22% year over year in the most recent quarter. With people spending more time at home, the company's cleaning and disinfecting products are in big demand in order to help slow the coronavirus spread. Clorox is forecasting elevated demand for its products to continue for at least the first half of its fiscal year 2021. Indeed, coronavirus cases are surging in several parts of the world, which could lead to elevated sales for the foreseeable future.

Second, are the increasing sales flowing through to shareholders? While revenue increased 22% in the most recent quarter, diluted earnings per share increased 28%. The company has increased its marketing spend, and that should increase customer loyalty. If this turns out to be successful, it should boost sales in the long run -- a considerable accomplishment for a company that's expected to grow revenue in the low to mid-single digits.

Along those lines, CEO Kevin Jacobsen said in a press release:

"Our focus now is building on this momentum, investing aggressively in brand-building and category growth as well as in production capacity to meet heightened demand. We feel confident these investments will allow us to capitalize on new opportunities, supporting our ambition to accelerate profitable growth and generate long-term shareholder value."

Finally, investors will want to know how Clorox's long-term strategy, launched in October 2019 called IGNITE, is faring. For those unaware, the IGNITE strategy is designed to "accelerate innovation in key areas to drive growth and deliver value for both shareholders and society". The initiative rests on four strategic choices: Fuel Growth, Innovate Experiences, Reimagine Work, and Evolve the Portfolio. As part of IGNITE, the company's financial goals include sales growth, operating margin expansion, and generating annual free cash flow at the rate of 12% of sales.

What it could mean for investors

Analysts on Wall Street expect Clorox to report revenue of $1.76 billion, which would be an increase of 16.8% from the prior year. Additionally, earnings per share is expected to come in at $2.33, which signifies a 46.5% growth.

The company is enjoying surging demand while it lasts. However, investors need to keep in mind that double-digit growth is not in the cards for Clorox in the long run. Still, Clorox does not need to achieve high-level growth to be a quality consumer staple stock that shareholders can rely on for long-term gains in value.

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Procter & Gamble - >>> A top-notch Dividend King to hold forever


https://www.fool.com/investing/2020/10/31/3-dividend-stocks-that-should-pay-you-the-rest-of/


Over the course of 181 years, Procter & Gamble (NYSE:PG) has built a massive business empire. Today, it boasts a portfolio of 65 brands, most of which are globally renowned household names such as Pampers, Oral-B, Gillette, Crest, and Vicks. In fact, the consumer products behemoth owned 170 brands until around five years ago, when management decided to slim the business down, cutting out low-margin products to build a leaner, more profitable portfolio.

In the intervening years, the company also made some big growth moves, including the $4.2 billion acquisition of Merck's consumer health business. P&G generated $71 billion in sales in its fiscal 2020, which ended June 30. The fabric and home care category (with brands like Tide and Swiffer) was the largest contributor, accounting for 33% of P&G's sales and 31% of earnings.

Because its daily-use products enjoy resilient demand, P&G has been able to generate large amounts of cash flow that it has doled out to shareholders. It has paid a dividend for 130 years, and increased its payout annually for 64 consecutive years. That has earned it a place among the rarefied class of Dividend Kings.

P&G just delivered a strong fiscal first quarter and upped its outlook for the full fiscal year. The stock currently yields 2.2% and the company expects to pay out $8 billion in dividends in the year. With management laser-focused on margins, cash flows, and dividends, income investors can count on being able to sit back and collect good payouts from P&G year after year.

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>>> Kimberly-Clark Loses Ground to P&G in Q3

Profitability is being pressured as the market-share battle heats up.


Motley Fool

Demitri Kalogeropoulos

Oct 23, 2020


https://www.fool.com/investing/2020/10/23/kimberly-clark-loses-ground-to-pg-in-q3/


Kimberly-Clark (NYSE:KMB) isn't done feeling the positive impact of soaring demand for consumer staples. The owner of the Huggies diaper and Kleenex tissue brands just announced surprisingly strong third-quarter sales growth while lifting its short-term outlook.

The company joined rival Procter & Gamble (NYSE:PG), which reported results two days earlier, on those encouraging big-picture operating trends. But there's evidence that P&G is gaining more than its fair share of market growth.

Market share battles

Organic sales came in a bit stronger than expected at 3%. But that performance still marked Kimberly-Clark's second straight quarter of slowing growth. P&G, on the other hand, saw growth speed up to 9% from 6% in the most recent quarter.

The industry leader stood out in a few other key growth metrics, too. Volumes rose 7% compared to Kimberly-Clark's 2% uptick. And P&G gained market share in the key U.S. market, where organic sales rose 16% versus Kimberly-Clark's 8% boost.

CEO Mike Hsu and his team still sounded a positive tone about the broader results and about Kimberly-Clark's improving competitive position in baby care. That was the only product category that declined in P&G's results earlier in the week. "Our market share positions are healthy overall and we are on track to achieve excellent financial results this year," Hsu said in a press release.

Rising costs

Kimberly-Clark is apparently losing ground in the profitability race, too. The company reported higher manufacturing costs, increased advertising spending, and extra investments in labor. Cost cuts helped blunt the impact from these spikes, but adjusted operating profit still fell to $806 million from $859 million a year ago. P&G, meanwhile, reported inflating profit margins as consumers flocked toward its new product introductions in niches like laundry care.

Cash flow trends weakened, as management had predicted they would. Yet Kimberly-Clark found enough room to invest heavily in the business while paying out a substantial dividend and spending nearly $200 million on stock repurchases.

Looking ahead

Kimberly-Clark's new outlook contained several upgrades, just like P&G's did a few days earlier. But investors might find the 2020 forecast lacking. The company now sees organic sales rising by about 5% compared to the prior prediction, which ranged from 4% to 5%. Earnings will grow a bit faster than expected, too.

The company isn't expanding its sales footprint as quickly as global peers, though. Management seemed to admit that shortcoming when it projected sustained spending aimed at closing some of Kimberly-Clark's innovation gaps. "We are significantly increasing our growth investments for future success," Hsu said.

Ideally, these investments won't pressure the company's profitability for too long before sales growth picks up in its core consumer staples categories. That means investors will be watching the balance between organic sales and operating profit margin over the next few quarters for signs that Kimberly-Clark's rebound plan is keeping it from losing more ground to P&G and other players in this attractive industry.

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>>> Churchill Downs Incorporated (CHDN) operates as a racing, online wagering, and gaming entertainment company in the United States. It operates through three segments: Churchill Downs, Online Wagering, and Gaming. The company owns and operates Derby City Gaming, a historical racing machine in Louisville, Kentucky; online horse racing wagering platform, TwinSpires.com; and offers sports betting and iGaming through BetAmerica platform. It also operates 5 racetracks, including Churchill Downs Racetrack in Louisville, Kentucky; Arlington International Race Course in Arlington Heights with 12 off-track betting (OTB) facilities in Illinois; Fair Grounds Race Course in New Orleans along with 14 OTBs in Louisiana; and Calder Race Course in Miami Gardens, Florida. In addition, the company operates 8 casinos, which provides brick-and-mortar casino gaming services with approximately 11,000 slot machines and video lottery terminals and 200 table games; and operates hotels. Further, it offers streaming video of live horse races, replays, and an assortment of racing and handicapping information; and provides the Bloodstock Research Information Services platform for horse racing statistical data. Additionally, the company manufactures and operates pari-mutuel wagering systems for racetracks, OTBs, and other pari-mutuel wagering businesses; and provides totalizator services. Churchill Downs Incorporated was founded in 1928 and is headquartered in Louisville, Kentucky.

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>>> Philip Morris Raises Bottom of Earnings Estimate, Boosts Dividend


Philip Morris raises the bottom of its estimated earnings range for 2020 and increases its quarterly dividend.


The Street

by DAN WEIL

SEP 10, 2020


https://www.thestreet.com/investing/philip-morris-pm-stock-earnings-estimate-dividend?puc=yahoo&cm_ven=YAHOO&yptr=yahoo


Shares of Philip Morris International (PM) eased Thursday, even after the tobacco giant raised the bottom of its estimated earnings range for full-year 2020 and increased its quarterly dividend.

The company revised its GAAP earnings per share forecast to a range of $4.92 to $4.99, at prevailing exchange rates, compared to its prior forecast range of $4.84 to $4.99, which was provided on July 21.

“This primarily reflects the expectation of a stronger-than-anticipated performance in the third quarter,” the company said in a statement.

“Excluding an unfavorable currency impact, at prevailing exchange rates, of approximately $0.31 per share, asset impairment and exit costs of $0.04 per share, and a fair value adjustment for equity security investments of $0.04 per share, this forecast represents a projected increase of approximately 3.5% to 5.0% versus pro forma adjusted diluted EPS of $5.13 in 2019,” the company said.

In addition, “excluding an unfavorable currency impact, at prevailing exchange rates, of approximately 7 cents per share, PMI now expects third-quarter reported diluted EPS to be broadly in line with the company’s third-quarter 2019 adjusted diluted EPS of $1.43,” the company said.

As for the dividend, which will be paid Oct. 13, to shareholders of record as of Sept. 24, it was boosted 2.6% to $1.20 a share from $1.17.

Looking at second-quarter earnings, they were “fairly strong,” Morningstar analyst Philip Gorham wrote in July. He put fair value for the stock at $98.

Philip Morris recently traded at $80.12, down 0.43%. The stock has slipped 6% year to date, while the S&P 500 has risen 6%.

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>>> Lowe's and Home Depot Crushed Earnings: Can They Keep It Up Long-Term?


Here's why they performed so well during the pandemic and what it means for their future outlook.


by Jennifer Saibil

Sep 10, 2020


https://www.fool.com/investing/2020/09/10/lowes-hd-crushed-earnings-can-they-keep-it-up/


The home improvement industry benefited over the past few months while people stayed home and spent their stimulus checks on home improvement projects. According to the U.S. Department of Labor, categories like home furnishings and gardening saw gains starting in May. Two of the winners here were Lowe's (NYSE:LOW) and Home Depot (NYSE:HD), rival home improvement chains that dot the American landscape.

Both of these companies have put tremendous amounts of resources into restructuring and becoming agile businesses that are in line with current digital trends. Both companies saw surging demand in the first half of 2020, and they delivered (physically and figuratively). But will these trends remain long term? And how will they affect the companies' stocks?

Ready for this moment

As difficult as the pandemic has been for so many businesses and individuals, technology has eased the pain. Customers don't have to leave their homes when Amazon's Prime packages arrive at their doorsteps, and most large U.S. businesses were prepared for the switch to online retail with a full digital smorgasbord.

Competition has heated up between the perennial leader in home improvement, Home Depot, and the No. 2 Lowe's. Both of these companies have invested in their digital platforms and made other changes to their operations that positioned them for growth during the pandemic.

Keeping up its lead

Home Depot initiated its "One Home Depot" strategy in 2017 to create interconnected offerings and meet customer demand in the digital age. That paid off over the past few months as Home Depot earnings jumped almost 25% in the second quarter ended Aug. 2, a period that included lockdowns across the U.S. Digital sales increased approximately 100% with customers picking up 60% of those orders in store. The home improvement project trend was obviously a sales driver as well, and the 23% revenue growth was well above the company's more typical single-digit quarterly increases.

The fiscal second quarter may prove to have been an outlier, but there are signs that growth will continue. CEO Craig Menear said, "Our recent customer survey work tells us that customers have a continued willingness to take on both indoor and outdoor projects in the near term." As ordering and purchasing becomes easier, and as customers become more comfortable with do-it-yourself home improvement, the company grows its loyal customer base.

The work Home Depot put into its channels across the board, including opening new regional fulfillment centers, positions it for additional growth even now that people are out of their homes and spending on other categories. With COVID-19 still uncontained and general uncertainty in the market, Home Depot declined to provide a business outlook. However, investors can expect sales to remain elevated, though the rate of growth will likely come down.

Closing the gap

Lowe's has gone through a similar transformation over the past few years. After playing second fiddle to Home Depot for decades, the company hired Marvin Ellison in 2018 to preside over the company's move into digital. Lowe's has more than 2,200 stores, up from 1,977 at the beginning of fiscal 2020, and the retailer is catching up to the footprint enjoyed by its rival. Lowe's revamped its entire digital portfolio in 2019 and moved its website to Google Cloud, and it's in the process of investing $1.7 billion in its supply chain over a five-year period. Another innovation -- and there are many -- is a new labor scheduling system that better aligns store associate hours with high-traffic times.

U.S. comps grew a tremendous 35% in the fiscal second quarter ended July 31, fueled by a 135% increase in digital sales. There were substantial increases in DIY, Pro, and millennial shoppers, which is another strong sign that sales will continue to rise going forward. While the growth will moderate -- analysts expect revenue to increase 16% year over year in the fiscal third quarter -- these trends will fuel results at the home improvement chain for a long time.

Are they both good investments?

Shares of Lowe's and Home Depot have put up comparable gains in 2020 year to date, but the former still boasts the cheaper valuation at 21 times trailing earnings. Home Depot trades a slight premium of 25 times.

Regardless of these minor differences, both companies have a tremendous opportunity ahead of them. Investors just need to remember that even these leading retailers will see growth gradually return to normal levels.

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