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Kimberly Clark Corp (KMB): Four Reasons to Give This Blue Chip Another Look

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Kimberly Clark CorpSometimes finding a winning investment is less about discovering the next big thing, and more about finding a good value in an already strong company. While a large blue chip stock like Kimberly Clark Corp (NYSE:KMB) won’t win a prize for the most exciting company, or the fastest growth rate, there is a lot to like about a company that makes money cleaning up other people’s messes.

Goliath Versus Goliath

In many industries you’ll hear analysts suggest that the battle between two companies is a fight between David and Goliath. However, in the personal care industry, investors are treated to a battle of industry titans on a quarter to quarter basis. Kimberly Clark Corp (NYSE:KMB) is arguably one of the lesser-known companies of the industry, which includes The Procter & Gamble Company (NYSE:PG)Colgate-Palmolive Company (NYSE:CL), and The Clorox Co (NYSE:CLX).

When your competitors offer brands such as Pampers, Colgate, and Clorox, and those are just a few of their offerings, you know you’re fighting with the big boys. Though Kimberly Clark Corp (NYSE:KMB) offers well-known brands like Huggies and Kleenex, you can see the company faces competition unlike in any other industry.

Organic Growth, and I’m Not Talking about Food

When large companies report earnings, many times you’ll see the words “organic growth” mentioned. However, companies have different definitions of what constitutes organic growth. For instance, at some point it became acceptable to refer to revenue growth based solely on price increases as “organic.” I would suggest that real organic growth is when a company sells increased volume of their product, as this indicates increased demand from consumers.

This leads us to one of the main reasons investors should take a look at Kimberly Clark Corp (NYSE:KMB): the company is reporting strong volume growth at its two most important divisions, and not just increasing prices. In their last earnings report Kimberly-Clark reported a 3% volume increase in their personal care division, and a 4% increase in their consumer tissue segment.

By comparison, The Clorox Co (NYSE:CLX) saw volume increases of just 1% at most of its divisions. The Procter & Gamble Company (NYSE:PG) saw mixed results, with beauty and grooming volume decreasing, while baby volume increased. Of Kimberly Clark Corp (NYSE:KMB)’s peer group, the only company with clear strength across the board was Colgate-Palmolive Company (NYSE:CL), which saw volume increases of at least 3.5% in most of its geographies.

Second Best but a Strong Combination

When a company can claim to offer neither the highest yield, nor the fastest growth rate, you might expect investors to ignore the stock. However, things are rarely that simple and it makes a lot more sense to look at the overall value being offered as opposed to just one number.

The second reason investors should take a look at Kimberly Clark Corp (NYSE:KMB)’s shares is the company’s relatively strong yield versus their peer group. At the present time, investors are being offered a yield of about 3.2% from Kimberly-Clark, and the only company in their peer group offering a better yield is The Clorox Co (NYSE:CLX) at about 3.3%. The Procter & Gamble Company (NYSE:PG)’s 3% yield, and Colgate-Palmolive Company (NYSE:CL)’s 2.3% yield are respectable, but every little bit helps in a low interest rate environment like we’re in today.

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