On Tuesday’s episode of CNBC’s Mad Money, Jim Cramer highlighted Kimberly-Clark Corporation (NYSE:KMB) as a defensive holding for investors looking to lock in profits from high-flying technology stocks and reallocate into lower-risk value plays. After years of sluggish price action, Cramer noted that the consumer giant has finally established a stable bottom, anchored by a major strategic transformation:
This one’s finally found its footing after struggling for years. Best of all, Kimberly-Clark realized it needs to consolidate, which is why it’s acquiring Kenvue, J&J’s old consumer health business. I want you to think there… Tylenol, Neutrogena, Listerine, Band-Aids. These are everyday necessities that consumers buy regardless of the state of the economy or the price of gasoline. Doesn’t hurt that Kimberly-Clark will pay you handsomely while you wait for the deal to close.
The Kenvue Catalyst and Defensive Moat
The acquisition of Kenvue Inc. (NYSE:KVUE), the consumer health business spun off from Johnson & Johnson (NYSE:JNJ), gives Kimberly-Clark control over everyday staples including Tylenol, Neutrogena, Listerine, and Band-Aids. In Cramer’s view, these essential health and wellness products generate steady cash flow through every economic cycle because consumer demand remains constant regardless of broader economic conditions or fuel prices. In addition, the combination provides a credible path toward accelerated revenue growth, higher operating margins, and substantial cost-reduction opportunities while protecting the business from foreign competition.
Valuation Snapshot and Dividend King Status
Despite its long-term stability, the stock has traded sideways for an extended period, creating what Cramer describes as a rare bargain in an otherwise rich market. Trading at roughly 14 times this year’s earnings, Kimberly-Clark sits near its lowest valuation multiple in a decade, outside of its brief dips earlier this year, he noted. Alongside that discounted entry point, the company delivers substantial income to patient shareholders. Management raised the quarterly payout to $1.28 per share earlier this year, driving the dividend yield up to 4.74%. With 54 consecutive years of annual dividend increases, Cramer noted that Kimberly-Clark Corporation (NYSE:KMB) holds the status of a Dividend King, paying investors a generous yield while waiting for the Kenvue transaction to close.
Photo by Adam Nowakowski on Unsplash
Q2 Earnings Outlook and Tactical Buying Strategy
Kimberly-Clark is set to report its second-quarter financial results in two weeks on August 4th. Cramer made it clear that investors should not expect a blowout performance, emphasizing that the stock is a steady compounder rather than an aggressive growth play:
I’m not expecting a blowout quarter… This is not a runaway situation. This is one of those things I’m trying to show you that you can add while you take a little bit of tech out of your portfolio. I’m looking for stocks with good potential upside that will also let you sleep at night. Kimberly-Clark is a defensive business with a 4.7% yield and a cheap stock that is protected from a lot of foreign competition. Plus, the Kenvue acquisition gives it a credible path towards faster growth, higher margins, and a much broader health and wellness platform. I’m not expecting the second quarter report to be the catalyst here, but I think it’s a great long-term opportunity. In fact, I actually hope it sells off in the quarter… letting you buy some on weakness.
Wall Street’s Risky Bet: 14.5% Short Float Meets Strong Institutional Backing
Wall Street institutions hold a firm stake in Kimberly-Clark Corporation (NYSE:KMB), with institutional investors owning approximately 93.39% of it, according to Refinitiv. As per Insider Monkey’s database, 59 hedge funds held a position in the stock during Q1 2026, the same as the prior quarter. Still, the total dollar value of hedge fund holdings increased by over $1 billion sequentially. Two Sigma Advisors was the company’s most prominent shareholder after increasing its stake by 112% to nearly $500 million.
On the short side, data reveals an unusually elevated short float of 14.56%. While a double-digit short interest shows Wall Street’s lingering skepticism over the company’s multi-year period of sluggish growth, it also creates potential short-squeeze tailwinds. If the Kenvue Inc. (NYSE:KVUE) integration and cost-reduction efforts begin to bear fruit faster than expected, short sellers could be forced to scramble and buy back shares, providing extra fuel for a post-earnings rally.
Valuation Clash: KMB’s Bargain Multiple vs. Consumer Staple Peers
When measured against the broader consumer staples sector, Kimberly-Clark Corporation’s (NYSE:KMB) value proposition becomes even more pronounced. Industry titan Procter & Gamble Company (NYSE:PG) commands a premium forward multiple near 21 times earnings while offering a dividend yield of roughly 3%. Meanwhile, major competitors like Colgate-Palmolive Company (NYSE:CL) and Unilever PLC (NYSE:UL) trade at approximately 24 times and 17.4 times earnings, respectively.
Kimberly-Clark Corporation’s (NYSE:KMB) discounted 14.5 times earnings multiple and 4.74% yield give income-oriented investors superior cash generation alongside meaningful valuation upside as the Kenvue Inc. (NYSE:KVUE) integration unfolds.
While we acknowledge the risk and potential of KMB as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than KMB and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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