We recently published a list of the 10 Best Soaps and Cleaning Materials Stocks to Invest In. In this article, we are going to take a look at where Kimberly-Clark Corporation (NYSE:KMB) stands against other best soaps and cleaning materials stocks to invest in.
Overview of the Consumer Staple Sector
Soaps and cleaning materials stocks fall in the consumer staple sector. According to the Global Industry Classification Standard (GICS), these stocks are less sensitive to economic cycles, as all consumers need to eat, clean themselves and their houses, and perform other acts of personal hygiene. Consumer staples are thus an integral part of life.
These stocks generally do not have the highest year-over-year revenue and earnings growth. This is primarily because they are usually mature and large companies. However, the consumer staples sector has historically experienced relatively minute disruption. Stocks in this sector have various other characteristics that overshadow their modest growth. These characteristics include noncyclic and inelastic demand that does not fluctuate with changing prices and economic conditions. They also entail stable revenue streams, reliable profits, low price volatility, defensive positioning, and a reliable dividend-paying nature.
What Does 2025 Look Like for Consumer Staples?
On December 10, Ben Shuleva, Fidelity Sector Portfolio Manager, published a report on Fidelity Investments to discuss the outlook and expected nature of consumer staples in 2025. The consumer staples sector had a positive year in 2024. Shuleva is of the view that with sector dynamics returning to normal, 2025 is also expected to have a positive outlook for the sector. Solid consumer balance sheets, a strong economy, and support from the Fed may help the sector perform better than the broader market. Opportunities thus exist in consumer staples in 2025. Stable consumer demand, steady real wage growth, and healthy employment are further expected to support these opportunities.
However, Shuleva warned that some uncertainties may affect the sector. These include trade policy changes that may arise due to Trump’s incoming presidential administration, the effects of tariffs, and the potential consequences of the dollar’s strength or weakness. He further highlighted that since most consumer staple products are manufactured in the United States, the direct effects of tariffs are expected to be limited. However, products like Mexican alcohol and Chinese items sold by consumer staples retailers may experience price increases.
Shuleva also presented a bright side to the sector, reasoning that since consumer staple businesses have experienced volatility from changing tariff policies in recent years, they are likely to be well-prepared for them. Like other sectors, the consumer staples sector’s ultimate performance depends upon the broader economy’s performance. It is a defensive sector, and defensive sectors are historically likely to perform well in economic weaknesses.
Our Methodology
We sifted through stock screeners, online rankings, and ETFs to compile a list of 15 soaps and cleaning materials stocks. We then selected the top 10 stocks most popular among elite hedge funds. We sourced hedge fund data from Insider Monkey’s database. The stocks are sorted in ascending order of the number of hedge fund holders that have stakes in them as of fiscal Q3 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A stack of disposable diapers in the foreground with a mother and her baby in the background.
Kimberly-Clark Corporation (NYSE:KMB)
Number of Hedge Fund Holders: 45
Kimberly-Clark Corporation (NYSE:KMB) manufactures and markets a range of products by employing advanced technologies in absorbency, nonwovens, and fibers. It operates in three segments: the Personal Care segment, the Consumer Tissue segment, and the K-C Professional segment. It sells its products under various brands, including Kleenex, Scott, Cottonelle, DryNites, Huggies, and others.
The company is known to produce consistent results irrespective of the economic cycle, giving it the reputation of a stock that manages well even during a broader market sell-off. It is, however, experiencing volume and pricing pressure. Consolidated volumes grew by only 1% in the first three quarters of fiscal 2024, and net prices increased by 2%. These headwinds are caused by several factors, such as retail inventory reductions as its service levels improve, weaker demand in North American professional channels, decreased demand in private label businesses, and pockets of deceleration in Latin America and Asia.
Although the company’s growth does not paint a positive picture, it is a source of passive income at value. This is why investors with more interest in dividend income instead of potential capital gains are bullish on Kimberly-Clark Corporation (NYSE:KMB). It is driving consumption and growing its share across markets and categories, supported by increased commercial execution and acceleration in innovation.
Overall, KMB ranks FIFTH on our list of the 10 best soaps and cleaning materials stocks to invest in. While we acknowledge the potential of soaps and cleaning materials stocks, our conviction lies in the belief that 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 but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
- READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.