Kimberly Clark - my secret crush
moneyrelations :: Jan.24.2008
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Have you ever been in love with a company? There are names out there like Apple or Google that would make fanboys drool if you’re in tech. And with the recent sell-off, they might be good buys.
But at last, that’s not for me as I’m trying to build my portfolio on boring but steady blue-chips.
For some reason, I’ve always had a girl crush on Kimberly Clark… health care products.
I first noticed the name a few years ago in public bathrooms. And no, it wasn’t scrawled in graffiti in a derogatory fashion.
The name was on all the dispensers: toilet paper, soap, paper towel. So I looked the name up and I found these brands under its umbrella: Kleenex, Scott, Cottonelle, Huggies, Depend, Kotex.
Some pretty recognizable names there. I’ve also seen the brands abroad as well.
With the recent decline in the markets, I decided to check how Kimberly Clark (NYSE: KMB) was doing.
Just quickly eyeballing the price, P/E and yield, it is starting to look interesting.
KMB is also coming out with its fourth quarter earnings report today. The analysts think the stock is a “buy” and rated the company as an “outperform”.
I’m definitely keeping this company on my radar. Like most companies, it’s feeling a margin squeeze by higher commodity prices. In turn, the company raised prices on its products. But folks, we’re talking about toilet paper. I think it’s a staple for most of us 
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Some things really are recession proof. I’ve heard that “Brides” magazine was begun in the depression, on the assumption that money or no money, there would always be weddings and there would always be a market for this magazine. I imagine the same could be said about toilet paper!
I have always kept an eye on Kimberly Clark. As a company it has done an admirable job of holding upto the likes of P&G but unfortunately, you cannot depend on KMB actually gaining market share in the saturated markets that it is in. There are only two ways to grow for them a) growth in population (and kids) in the markets that they are in, and b) entering new markets. The 3rd possibility is for them to introduce new innovative products but I am afraid P&G can actually match them punch for punch
Regardless of growth prospects, the stock could be a buy depending on how you feel about their valuation as well as if you are a dividend investor. Personally, I would need their PE to drop close to 10-11 before buying into it but I understand that other investors may have different opinion
Hey Grace,
Interesting view about Brides magazine. I wonder if the situation is true today… or do couples just elope or maybe just go common law!
Hi Arohan,
There’s my dilemma. JNJ, PG, or KMB. I want a consumer staples and they are all trading roughly at around the same price. What to choose, what to choose… I need to brush up on my fundamental analysis. And maybe I should throw my hands up all together and index! But like I said, I’ve always liked KMB because I use the products everyday… I need to figure out if it’s a good buy or if I’m in love with the idea.
I agree with Arohan with the P/E ratio.. 15-16 is a bit high for a company in a saturated market.. Their yield isn’t eye-popping either.. What’s worse is that their forward P/E is higher than their current P/E!
@ Adil
That’s the thing with these companies. They trade at a premium and I think it will be awhile before the P/E drops that low. Especially for defensive stocks… Like I said, I have to guard myself from my “stock crushes” which I think comes from inexperience. You feel as though you need to buy/sell - just do something. Thankfully, I’ve matured a bit