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Oakland, California, might not be too pleased with the performance of the Raiders, but the (other) City by the Bay can take some pride in The Clorox Company (NYSE: CLX), a hometown stock made good. Even those of you bracing for the worst-case economic scenario can take heart in the fact that Clorox has been around since 1913, and successfully weathered two World Wars and the Great Depression.
In addition to its eponymous bleach, Clorox produces a slew of other well-known consumer staples. You may recognize such brand names as Pine-Sol, Formula 409, Brita, Glad, Hidden Valley, and Burt's Bees -- one of the newest additions to the CLX family. The Burt's Bees buy indicates that Clorox isn't resting on its stable of staples; instead, the company is actively trying to stay relevant amid a shifting consumer climate.
The home-goods firm released its first-quarter earnings on October 31 and cruised past analysts' profit estimates by seven cents per share. Clorox trimmed its sales outlook due to the expected impact of declining foreign currencies, but Chairman and CEO Don Knauss showed no hint of vulnerability. "We will not give consumers a reason to choose another brand," Knauss vowed on a conference call.
Technically, CLX is doing almost unbelievably well. The stock is still forming a pattern on the charts that looks like a long-term uptrend, and its pullbacks have been contained since 2000 by its 100-month moving average. Look for any future dips in Clorox to meet their demise in the form of this tried-and-true trendline.
As a point of caution, potential resistance looms overhead in the $65-to-$70 region. The former price is the site of previous resistance in May 2005 and September 2008, while the latter area marks the equity's 2007 peak. This indicates that CLX could be entering a period of sideways price action during the intermediate term, which might frustrate investors seeking stocks poised to rally. However, if you're just looking for a stable security that pays a respectable quarterly dividend, you may need to look no further than Clorox.
Despite the fact that it has held up better than the broader market, CLX doesn't get much love on Wall Street. The average 12-month price target on the stock is $62.64, a tepid premium of 5.8% to its closing price on November 30. Additionally, Zacks reports that 66% of brokerage firms maintain a Hold or Sell rating on this consumer-staples company. If CLX continues to outperform in this tough environment, new upgrades or price-target increases could help the shares challenge old chart resistance.
Plus, CLX's price/earnings ratio of 17.4 at the end of November looks like a bargain; its five-year average p/e is 21.1.