4. The Clorox Company (NYSE:CLX)
Number of Hedge Fund Holders: 39
Element Capital Management’s Stake Value: $17,609,000
Dividend Yield as of March 9: 3.35%
The Clorox Company (NYSE:CLX) is an American manufacturer of consumer and professional products. As the company’s management indicated a recovery in sales to pre-pandemic levels, in February, Citigroup set a $160 price target on the stock, with a Buy rating on the shares.
The Clorox Company (NYSE:CLX) pays a quarterly dividend of $1.16 per share, growing it by 5% in 2021. The stock’s dividend yield, as of March 9, stood at 3.35%. The company has been a dividend payer for the past 50 years and also maintains a 20-year track record of consistent dividend growth. The Clorox Company (NYSE:CLX) was one of the latest holdings of Element Capital in Q4 and represented 1.13% of its 13F portfolio.
By the end of Q4 2021, 39 hedge funds in Insider Monkey’s database held stakes in The Clorox Company (NYSE:CLX), up from 34 in the previous quarter. The total value of these stakes is around $1.2 billion. Andy Brown’s Cedar Rock Capital held a stake worth $238 million in the company, becoming its largest stakeholder in Q4.
LRT Capital Management mentioned The Clorox Company (NYSE:CLX) in its Q1 2021 investor letter. Here is what the firm has to say:
“For several months now, our largest position has been Clorox – the cleaning products company. Besides wipes, the company also manufactures bleach, charcoal, cat litter, plastic bags, and container products. Clorox benefited during the Covid-19 pandemic from an increased demand for cleaning products. Companies and consumers trust the Clorox brand – a source of the company’s huge competitive advantage.
United Airlines, for example, chose to partner with Clorox in its push to reassure consumers about the safety of air travel. The company is a typical “defensive” holding – subject to very small fluctuations in end market demand. Its branded consumer products remain in strong demand. Historically (pre-Covid), the company’s sales grew in line with GDP, while earnings-per-share grew slightly faster due to operational and financial leverage. We expect sales will decline slightly in the next few quarters as the Covid-19 pandemic comes to an end, but we believe this decline is more than accounted for by the company’s low valuation.
On February 4th, Clorox reported results for Q4 2020, with both earnings and sales beating estimates. Sales grew by +27% (vs. 20% estimate) from the prior year’s Q4, and EPS increased +39% ($2.03 vs. $1.75 expected). The company continues to see robust demand and raised its sales and EPS guidance for the rest of the year. Shares are down 4% year-to-date. We believe the shares are undervalued at 20x trailing and 24x forward earnings and currently represent an excellent opportunity.”
