South of the border
But Colgate-Palmolive Company (NYSE:CL) is enjoying volume increases in just about every country except Venezuela, where strongman Hugo Chavez wrecked the economy with his monetary policy. The currency devaluation he effected is a difficult obstacle to overcome, but now with his death, the prospect for a more moderate replacement that allows Venezuela to experience the kind of growth Colgate has seen elsewhere in Latin America becomes more of a reality.
Latin America accounts for 18% of its revenues, and organic growth was up 4% during the quarter. Where it saw volume gains in Brazil and Central America, the problems of Venezuela overshadowed them and wiped them out, so it’s not a minor concern.
Split the difference
Regardless, we have a company that operates a business essential to everyone’s health and well-being and is fortunate to own one of the best-selling, most-trusted names in the industry. Consumers will keep going back to the store to pick up more toothpaste week after week, creating a coin-drop business that can grow and grow.
Despite the gains it’s made, however, Colgate is no more expensive than P&G, and they’re running neck and neck in performance. Colgate’s stock split, however, will put its share price on par with its rival and will give investors at least a psychological rationale for buying its stock instead.
I see no reason to think Colgate-Palmolive Company (NYSE:CL) won’t be a bigger company five years from now and have rated it to outperform the broad indexes on Motley Fool CAPS, but let me know in the comments box below if this split also makes you smile.
The article Will Investors Smile After Colgate Split? originally appeared on Fool.com.
Fool contributor Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends PetSmart and Procter & Gamble.
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