In China, the company is expanding its network to 10 new cities in 2013 to become more competitive in the region. Kimberly Clark Corp. (NYSE:KMB) will also be investing into local manufacturing centers in China, Russia, and other Latin American markets to improve its distribution model. The company estimates its growth rates to be 25%, 15%, and 11% for China, Russia, and Brazil, respectively over the next five years. The overall weighted average growth rate from emerging markets is expected to be around 9% for the same period.
Additionally, the company’s cost saving program ,FORCE, was on track, and generated around $80 million in savings in the last quarter, and $335 million for the full year 2012. It further helped the company in enhancing its gross, as well as operating margins. For 2013, its operating profit is expected to grow around 3%-6%, driven by cost savings from this program. The savings will be in the range of $250 million – $300 million in 2013.
The overall outlook for the company remains positive, with its focus on the emerging markets where the demand is booming.
The Clorox Company (NYSE:CLX)
Following the acquisition of HealthLink and Aplicare in 2012, Clorox remains focused on the away-from-home segment, especially in Healthcare. The company has a strong base of customers for its cleaning products, including the top 15 hospitals. Moving forward, the company is expanding its product line in this category, also targeting the emerging markets for the same.
The company believes that this segment has the potential to turn into a $500 million business in the next five years. I see this as a huge opportunity for the company to increase its market share.
Another strong opportunity for Clorox is its Hidden Valley Farmhouse Originals, which is its salad dressing category. In January 2013, the company launched four different types of Italian and Vinaigrette dressings to its Hidden Valley Dressing portfolio. Though Hidden Valley is a very small segment of Clorox, and contributes just 8% to its total sales, this improved product line can generate higher sales for the company.
In 2012, Clorox took the leading position in the salad dressing category with around 21.8% market share, and addition of these new products are indicating more positive signs for 2013.
Clorox is also focusing on its cost-saving plans. Even though it doesn’t have a big restructuring plan, it has a three year target for potential cost savings. It expects more than 150 bps of savings in 2013.
The company’s expansion in the cleaning segment, and improved product line in Hidden Valley Dressing portfolio will lead to better operating performance in 2013. Also, the cost savings will provide the much needed support to the margins.
The bottom line
The growth prospects of these three companies are sound with new product launches, focus on emerging markets, and cost saving programs. These companies attract investors because of their focus on shareholders and excellent usage of their cash flow. I recommend a buy for all the three stocks.
The article 3 Must Buy Household Stocks originally appeared on Fool.com and is written by Madhu Dube.
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