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Colgate-Palmolive Company (CL) is on-track to record double-digit earnings growth in 2010 and in the immediate year after, hence it goes without saying I'm reiterating my buy rating for the company's shares, first recommended on April 13, 2009, at a price of $58.49. If you bought CL in April 2009, you're up about 35%.Lean, experienced Colgate-Palmolive has weathered the recession in good shape. Colgate, an assertive-defensive company, stayed one step ahead of the downturn -- closing about one-third of its factories, trimming excess marketing spending, and focusing on products in stronger-growth markets.
Further, CL's footprint adds an element of revenue diversification: the company operates in more than 200 countries. The First Call FY2009/FY2010 EPS estimates for CL are $4.33 to $4.84.
Technically, Colgate-Palmolive's stock retreated in December, but most of that decline can be attributed to short-term profit-taking by selected institutional investors (IIs) at year's end. Hence, view the pull-back as a buy opportunity.
2010 Outlook: Colgate-Palmolive is a long-term play. Don't buy CL if you're looking to close your position by the end of 2010, as the 1-year risk/return is not favorable.
Stock Analysis: Colgate-Palmolive is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in CL now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your CL position before March 2010. Sell/stop loss if you were to buy shares in this company: $59.
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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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