First recommended on November 16, 2007, Clorox was one of those well-established, demonstrated business model giants that was rudely treated by Wall Street, with the Street taking shares down to about $45 from $62.
Institutional investors punished Clorox (NYSE: CLX) for its erratic performance, but the view from here argues that stance was too harsh. Clorox's businesses are solid, but were affected by both the housing downturn (fewer households) and seasonal factors.
But now that the U.S. recession appears to be bottoming, and with a moderation in commodity/raw material costs, Clorox's shares are compelling at these levels, so I'm reiterating a Buy rating. The earlier Sell/stop loss of $44 held, and it remains in effect. The First Call F2009/F2010 EPS estimates for CLX are $3.80 to $4.17.
Stock Analysis: Clorox is a moderate-risk stock. Consider buying a 25% position in CLX now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your CLX position before October 2009. Sell/stop loss if you were to buy shares in this company: $44.
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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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