Clorox (CLX - Free Report) shares have surged 35% in 2020 to crush the S&P 500’s 5% decline. The reason for Clorox’s climb seems simple enough: Its disinfectant wipes are flying off the shelves during the coronavirus pandemic. With this in mind, investors might want to consider buying CLX stock as coronavirus volatility returns.
Clorox’s third quarter fiscal 2020 sales jumped 15% for the three-month period ended on March 31, with its cleaning unit up 32%. This expansion was driven by sales of its disinfecting wipes, sprays, bleach, and more, as consumers, businesses, healthcare professionals and more aim to clean surfaces as often as possible.
Meanwhile, CLX’s adjusted earnings surged over 31% to crush our Zacks estimate. “We’re shipping canisters of wipes every day to our customers, and within 30-45 minutes they’re gone from shelves,” Clorox CFO Kevin Jacobsen told the Wall Street Journal in May. “Demand has outstripped what anybody could have imagined.
Clorox stock has outperformed the market and its peers, which includes the likes of Unilever NV (UN - Free Report) , Procter & Gamble (PG - Free Report) , Colgate-Palmolive (CL - Free Report) , in 2020 because it’s growing as overall retail sales sink—aside from Amazon (AMZN - Free Report) , Target (TGT - Free Report) , Walmart (WMT - Free Report) , and other giants. Investors should note that CLX’s portfolio also includes everything from Kingsford charcoal and Brita water filters to Hidden Valley Ranch and Burt's Bees.
Better still, over 80% of Clorox’s sales are “generated from brands that hold the No. 1 or No. 2 market share positions in their categories.” Last quarter, its lifestyle division jumped 10%, while its household segment popped 2% and international sales climbed 11%.
CLX reportedly increased disinfectant production by 40%, but it still can’t keep up with soaring demand, which is a great problem to have given the current economic conditions. With this in mind, our current Zacks estimates call for CLX’s fourth quarter sales to jump 14% to nearly match Q3’s expansion and once again blow away all of its quarterly results for over a decade.
At the bottom end of the income statement, its adjusted Q4 earnings are projected to pop 5.3% to hit $1.98 a share. Meanwhile, its fiscal 2020 EPS figure is expected to climb over 9%, and its earnings revisions have trended completely upward recently.
Clorox’s strong earnings revision activity helps it earn a Zacks Rank #1 (Strong Buy) right now. CLX also holds a “B” grade for Growth in our Style Scores system and is part of an industry that rests in the top 8% of our more than 250 Zacks industries.
CLX recently raised its quarterly dividend by 5% and its 2.14% yield top’s the S&P 500’s 1.90% average. And Clorox stock is up 100% in the last five years, against its industry’s 23% average climb. Therefore, investors might want to turn to Clorox stock for both safety from renewed coronavirus volatility and for long-term stability and growth.
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