Economic downturns can be excellent opportunities for large companies. If their smaller competitors cannot survive, they disappear from the competitive landscape; if they can, they are ripe for takeover. It is the job of a value investor to identify which companies are large enough to survive the hard times, but not so large that they will be unable to grow when things turn around. Let’s look at these five cosumer-product companies, and see which are getting ready to turn around.
Colgate-Palmolive Company (CL): With a market capitalization of over $42.5 billion, consumer products giant CL is one of the largest players in a field predominated by giants. Its stock price is very stable, with a beta coefficient of .44; most of its major competitors are more volatile, with Procter & Gamble (PG) at .45, Estee-Lauder (EL) at 1.29, and Avon Products (AVP) at 1.69. Over 75% of its common shares are owned by institutional investors, showing the high level of confidence on the part of large investors. Its stock price of $88.06 per share is down from a high of $94.89 reached within the last few weeks, but price per share has been on a steady incline from a 52-week low of $74.86 (reached in January) and a three-year low of $56.05 some two years ago. With an ever-increasing dividend ($.58 per share, up from $.36 in 2007) and a muscular earning per share of 4.97, this is clearly a stock that will reward the long-term value investor, or the portfolio manager who is looking to hedge their riskier bets. To continue reading, click here