LRT Capital Management, in its Q1 2021 investor letter, mentioned The Clorox Company (NYSE: CLX), and shared their insights on the company. The Clorox Company is an Oakland, California-based consumer and professional products manufacturer that currently has a $21.9 billion market capitalization. Since the beginning of the year, CLX delivered a -12.60% return, while its 12-month returns are down by -13.90%. As of May 27, 2021, the stock closed at $176.48 per share.
Here is what LRT Capital Management has to say about The Clorox Company in its Q1 2021 investor letter:
“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.”
Our calculations show that The Clorox Company (NYSE: CLX) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the first quarter of 2021, The Clorox Company was in 38 hedge fund portfolios, compared to 39 funds in the fourth quarter of 2020. CLX delivered a -2.63% return in the past 3 months.
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Disclosure: None. This article is originally published at Insider Monkey.