The Clorox Co (CLX): It Is Not The Right Time to Invest in This Stock!

In contrast, Colgate-Palmolive Company (NYSE:CL) is quite an expensive buy at approximately 23 times the earnings. From a purely technical perspective, Clorox and The Procter & Gamble Company (NYSE:PG) are better investments because of their comparatively higher yields and cheaper valuations. One of the company’s biggest strengths is research and development which enables it to launch new products on a consistent basis. In fact, it saw a modest growth in the Euro region in the first quarter despite the region going through a massive macroeconomic crisis; this was due to the release of new products and product variations. In its first quarter earnings call, the management announced a plethora of new versions for its flagship Colgate range of toothpastes. Colgate-Palmolive Company (NYSE:CL) has always been ahead of the league in terms of innovation, and this has worked out very well.

Final words

As I mentioned in the beginning, The Clorox Co (NYSE:CLX) is not an adventurous stock with wide swings or complicated developments. The company is a leader when it comes to creating shareholder value. Market analysts have recently criticized Clorox’s valuation and in certain sense, I believe that it is slightly overvalued at the current price level. The company has a price-to-book value ratio of around 74, a scary number when compared to industry peers. It has also been unable to grow its overall sales in the 2013 fiscal year because of the poor performance of its household segment. The main reason behind this was a considerable decline in charcoal sales.

While The Clorox Co (NYSE:CLX) is a worthy stock for your portfolio any day, it is not advisable to take a new position in the company right now. In my opinion, a quarter’s wait is worthwhile because the company still needs to increase charcoal sales. Also, its flagship bleach products are seeing flat volumes as the market still needs time to accept the price increase. This simply is not a good time to buy the company’s stock.

The article It Is Not The Right Time to Invest in This Stock! originally appeared on Fool.com and is written by Mihir Mehta.

Mihir Mehta has no position in any stocks mentioned. The Motley Fool recommends Procter & Gamble. Mihir is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.