Colgate-Palmolive (NYSE: CL), a company that shares the supermarket shelves with Procter & Gamble (NYSE: PG) and Clorox (NYSE: CLX), issued a pretty cool earnings report on Thursday. On an adjusted basis, the bottom line rose 10% to an even $1.00 per share during the fourth quarter. That was two pennies better than expectations.
That was a good showing, and it displayed resilience on the part of the company. Colgate-Palmolive also did well in the third quarter. Statements in the press release show that management so far understands how to leverage the brand equity of its consumer-products portfolio to charge higher prices where it can. It might need to, considering that currency exchanges could be unfavorable.
It also seems to me that Colgate-Palmolive continues to be serious about cutting costs and introducing new products, two important keys to success with this type of business. I hope that the company intends on taking full advantage of the recession in advertising. Now is the time to advertise the heck out of its stable of products and build some long-term brand equity, maybe take some chances with new, edgier television campaigns. As the recession worsens, the lower price-points of generic products will look increasingly attractive to consumers who are looking to cut discretionary spending to the bone.
Colgate-Palmolive is, as always, a great dividend-paying core holding. And even on a shorter-term basis, the stock might be an interesting idea. It really should attract some money from institutions looking to play defense, but the problem is, the last year has proven that rationality is not a ubiquitous element on Wall Street these days. So, even though the stock might be something of a value, there's just no guarantee that the value style of trading/investing will come back in a timely manner. I don't think you'd go too wrong here with Colgate-Palmolive, since it is down for the year so far. I'd rather get it, however, at a yield a little closer to 3% as a safety measure.
Disclosure: I don't own any company mentioned; positions can change at any time.
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