Investopedia: Given Procter & Gamble's Performance, Should The Weak Volumes Matter More?

Investors seem to love gaudy expense-reduction programs, and Procter & Gamble (NYSE:PG) shares have certainly done better since Bill Ackman's Pershing Square got involved and management announced a $10 billion cost-cutting program. P&G's performance isn't so unusual in the wider context of a hot market for consumer staple stocks, but it's looking more and more like investors are overpaying for the margin improvement potential and earnings consistency of these names. Barring a quick turnaround in volumes, it looks like P&G shares have overshot the mark and offer less compelling potential from today's level.

Follow the link below to continue:
http://www.investopedia.com/stock-analysis/042513/given-procter-gambles-performance-should-weak-volumes-matter-more-pg-cl-chd-enr-un-kmb-ul.aspx

Investopedia: Kimberly-Clark Looks Way Too Expensive For What It Is

Investors can certainly make good money investing in well-run personal care companies with solid brands. Along those lines, names like Procter & Gamble (NYSE:PG), Colgate-Palmolive (NYSE:CL), Unilever (NYSE:UN), and Kimberly-Clark (NYSE:KMB) have all delivered very strong capital gains over the past year. In the case of Kimberly-Clark in particular, though, I do worry that this consumer staples melt-up has gone a little too far. I do like the company's growth potential in emerging markets, but commodity inflation could threaten further margin improvements and I believe the stock is too expensive relative to its growth prospects.

Please continue here:
http://www.investopedia.com/stock-analysis/042213/kimberlyclark-looks-way-too-expensive-what-it-kmb-pg-un-cl-jnj.aspx

Investopedia: Investors Seem To Already Buy Into Procter & Gamble's Turnaround Story

Turnarounds can be great investments, but you generally have to buy in at a point where the Street is still questioning the survivability of the company and pushing for dramatic, sweeping changes. In the case of Procter & Gamble (NYSE:PG), the pressure is still very much on management to deliver better results, but the shares don't reflect all that much uncertainty or pessimism about the company's prospects. On the contrary, it looks like the Street already pretty much expects this story to have a relatively happy ending.

Follow this link for the complete article:
http://www.investopedia.com/stock-analysis/2012/Investors-Seem-To-Already-Buy-Into-Procter--Gambles-Turnaround-Story-PG-CLX-CL-UL1213.aspx

Seeking Alpha: Can Labelmaker Multi-Color Make The Leverage Stick?

Multi-Color (LABL) is the sort of obscure small-cap company that I love; the company's products are ubiquitous and essential (product labels), but nobody really ever thinks about them. What's more, Multi-Color is a good play not only on the overall volume growth of consumer goods, but also on the increasing sophistication of labels and the very fragmented nature of the industry. While Multi-Color is not a very liquid or well-covered stock, I believe patient investors will be impressed with what this company becomes over the next three, five, or 10 years.

Please continue here:
Can Labelmaker Multi-Color Make The Leverage Stick?

Investopedia: Helen Of Troy Wilting Into The Fall

As a small, highly-leveraged company that must compete with brand-name goliaths such as Clorox (NYSE:CLX), Procter & Gamble (NYSE:PG) and Unilever (NYSE:UL) on a daily basis, it's not altogether surprising that Helen Of Troy (Nasdaq:HELE) shares can be very volatile. Today's poor growth numbers are certainly a concern, as are the company's long-term market position and cash flow leverage, but aggressive investors may see opportunity emerging in a company that has often been knocked down, only to rise once again.

Please read more here:
http://www.investopedia.com/stock-analysis/2012/Helen-Of-Troy-Wilting-Into-The-Fall-HELE-PG-UL-CLX1010.aspx

Seeking Alpha: Hypermarcas May Be On Several Shopping Lists

It's not uncommon for one company's failure to be another's opportunity. Built through aggressive acquisition, Brazil's Hypermarcas (HYPMY.PK) had leading brands in branded drugs, generics, personal care, home care, and food. Not so long ago, Hypermarcas looked like it was on the way to becoming Brazil's answer to Unilever (UL), Procter & Gamble (PG), or Johnson & Johnson (JNJ), but those plans have gone seriously awry.

Shrink To Survive
At the risk of oversimplification, Hypermarcas got too big too fast and pursued quantity (size) over quality. With a hefty amount of debt on the balance sheet, the company made itself vulnerable to performance shortfalls and that's exactly what happened.

Read the full piece here:
Hypermarcas May Be On Several Shopping Lists

Investopedia: Colgate-Palmolive Has Growth, But It'll Cost Ya

Perhaps there's nothing better today than a company that is logging very good growth with a set of products that are widely seen as economically-insensitive, day-to-day essentials. That has to be at least some of the explanation for the valuation of Colgate-Palmolive (NYSE:CL). For while this is absolutely an excellent company and a worthy buy-and-hold candidate for dividend-inclined investors, today's price is certainly no bargain.

Q4 Results - Good Growth, the Worst of the Margins?   

Colgate-Palmolive reported revenue growth of nearly 5%, with organic growth of 6% split evenly between volume and price. Oral/personal care (which is the overwhelming bulk of sales) had reported sales growth above 5%. By region, North America saw marginal growth (3.5%), while Europe was actually down 2% on an organic basis. Latin America and Asia/Africa both posted double-digit organic revenue growth. (For related reading, see Analyzing Operating Margins.)

Please click here for more:
http://stocks.investopedia.com/stock-analysis/2012/Colgate-Palmolive-Has-Growth-But-Itll-Cost-Ya-CL-PG-UL-JNJ0130.aspx

Investopedia: Icahn Puts Clorox In The Spin Cycle

Love him or hate him, Carl Icahn makes the world a more interesting place. Who else but Icahn would launch a multi-billion dollar bid for a company he likes while hoping that the bid ultimately fails? And yet, that is what is happening now with Clorox (NYSE:CLX), as Icahn apparently hopes to stimulate a superior bid from a larger consumer goods company. 


The Deal That May Be
Icahn (through Icahn Enterprises) has stepped up with a bid of $76.50 per share for the rest of Clorox (Icahn owns a little more than 9% of Clorox shares). That is a 12% premium to a stock that has been a pretty notable laggard versus the S&P 500 over the past two years (though an outperformer on the five year comparison).

If Clorox were to take this $10.2 billion deal, it would be at a valuation of about 10.6x trailing EBTIDA and less than two times forward sales - valuations that would still be below comparables like Procter & Gamble (NYSE:PG) and Colgate Palmolive (NYSE:CL). 



To continue, please follow the link:
http://stocks.investopedia.com/stock-analysis/2011/Icahn-Puts-Clorox-In-The-Spin-Cycle-CLX-PG-CL-KMB-UL-CHD-RGBPY.PK0718.aspx

Investopedia: Helen Of Troy Still Looking Fetching

Every experienced investor has a stock or two that they have followed seemingly forever but have never actually owned. Houseware and personal care product manufacturer Helen Of Troy (Nasdaq:HELE) is one of those for me. Apart from some issues with executive compensation, I have liked this consolidator and low-cost operator and have often seen it as an undervalued and unduly ignored player in a stable market. And yet, I always seem to manage to find some excuse not to own it at any given time. 


Perhaps now is the time. With fiscal first quarter results in hand, it looks as though the company's core businesses are doing fine but that there is still substantial opportunity to improve the cost structure of the newly-acquired Kaz business and find still more consolidation opportunities.

A Mixed Bag in Fiscal Q1
It will be interesting to see how Wall Street chooses to process and interpret Helen of Troy's fiscal first quarter results. On one hand, the top line was quite strong. Revenue grew by almost 70% on a reported basis, with the company's largest segment (Personal Care) growing more than 9%. Housewares revenue grew more than 10%, while the Healthcare/Home unit saw revenue growth of about 7% on a pro forma basis. Working back through the numbers, it would seem as though underlying organic revenue growth was better than 9% this quarter and the company did surpass the high end of analyst expectations. 



To read the complete piece, please click below:
http://stocks.investopedia.com/stock-analysis/2011/Helen-Of-Troy-Still-Looking-Fetching-HELE-PG-SPB-WMT-TGT0708.aspx

Investopedia: Darling: Dirty Business, Sweet Cash Flow

Well-known fund manager Peter Lynch once wrote that he often knew he had found an interesting investment opportunity when the company in question performed a service that was unpleasant or sometimes even disgusting. The example Lynch used was Safety-Kleen, a company that built an attractive business from the collection and recycling of oil and other industrial waste products. The same could certainly be said though for Darling (NYSE:DAR), the only publicly-traded company with significant operations in the field of rendering, recycling and recovering the food industry's biological waste products. 

A Solid End to the Fiscal Year 

Darling took a bit of the wind out of its own sails by preannouncing results for the fourth quarter a little while ago. Nevertheless, reported revenue growth of 52% (and organic growth of 33%) is still quite impressive and was quite a bit better than the original projections for the quarter. Likewise, the company's adjusted EPS of 0.22 was not only a bit ahead of updated expectations, but well ahead of the 17-18 cent range in place a month ago.

Although Darling does not include much information with its press release, the company followed its press release with its 10-K. To that end, free cash flow again ticked up for fiscal 2010. Investors should note that free cash flow growth has been trailing revenue growth, but increased amounts of capital expenditures have clearly played a role in that equation. 

The full article awaits at:
http://stocks.investopedia.com/stock-analysis/2011/Darling-Dirty-Business-Sweet-Cash-Flow-DAR-TSN-PPC-PG-CL-VLO-HON0304.aspx

Another Great Deal For Helen Of Troy

I have followed and written about consumer products company Helen of Troy (Nasdaq:HELE) for a long time, and yet I still find myself surprised at how the company operates. Simply put, this company just has a knack for finding attractive deals and pulling the trigger - common sense would dictate that other would-be rivals would look around and see the same business conditions and compete against these accretive opportunities for Helen of Troy. 

The Latest
Helen of Troy's stock spiked on Thursday on the company's announcement that it would be buying consumer products company Kaz for $260 million - a purchase that the company will fund largely out of debt. A privately-held company, Kaz sells a wide range of products in the personal care and houseware space, including air purifiers, fans, thermometers and humidifiers. Although the company has some of its own brands, a lot of Kaz's sales come from licensed brands like Vicks and Braun [both from Procter & Gamble (NYSE:PG)] and Honeywell (NYSE:HON). That is almost a perfect match for how HELE operates, and the two companies should fit together exceptionally well.

Solid Financial Reasons For The Deal
According to HELE, Kaz is on track to produce about $400 million in sales. That suggests an exceptionally good valuation on the deal, though on a price-sales basis, it is not much different than the valuations on companies like Newell Rubbermaid (NYSE:NWL), Jarden (NYSE:JAH) or Lifetime Brands (Nasdaq:LCUT). What is interesting about that comparison, though, is that all of those companies also have rather low returns on capital. That raises the question of just how well-run Kaz is and if HELE is buying a problem. (For related reading, check out How To Use Price-To-Sales Ratios To Value Stocks.)

Please follow this link for the full piece:
http://stocks.investopedia.com/stock-analysis/2010/Another-Great-Deal-For-Helen-Of-Troy-HELE-PG-HON-JAH-LCUT-NWL-CL1213.aspx

Johnson & Johnson Is Making Me Wonder

Another day, another recall from Johnson & Johnson (NYSE: JNJ).

This time, the company is recalling some chewable Rolaids products because of reports of metal and/or wood fragments in the products (!). This follows in the wake of I-can-no-longer-keep-track-of-how-many other recalls stretching back through this year, including some potentially damaging ones like the DePuy hips, a huge batch of kiddie medicines, and a bunch of product made in Puerto Rico.

So, here's what I'm wondering - are the operations at Johnson & Johnson a complete, total, and unmitigated fustercluck, or is JNJ taking a very close look at its processes and systems and going out of its way to be more responsive to any reports of problems? After all, JNJ may have reason to fear the long arm of the FDA in this new safety-obsessed regime and may hope that self-reporting and quick action will spare them some of the wrath.

Perhaps even more to the point, if this is going on at JNJ, is it also going on at Procter & Gamble (NYSE: PG), Colgate-Palmolive (NYSE: CL), Abbott Labs (NYSE: ABT) and other companies in the drug, device, and OTC market? And are we just all paying a little more attention to the JNJ recalls because there's a little schadenfreude in it all and we enjoy thinking "oh here they go again ... another JNJ recall. It must be another day that ends in 'y'"?

As I mentioned in passing on this blog a little while ago, I recently found a prescription-only narcotic pain reliever mixed into my factory-sealed bottle of over-the-counter antihistamine. That's not exactly the kind of mistake I'm likely to file under the "stuff happens" category, but maybe it shows that these mistakes are a lot more common than we realize and it is only the bullseye/spotlight on JNJ right now that is making it obvious just how often these things happen.

Disclosure - I own shares of JNJ

Helen Of Troy Has A Few Pimples

Helen of Troy (Nasdaq:HELE) is one of those surprisingly volatile stocks that seems much more turbulent than the underlying business would suggest. After all, how much year-to-year volatility should there be in curling irons and cookware? Nevertheless, this is a stock that has given investors numerous trading opportunities over the years. 

The Quarter That Was
The company's fiscal second quarter saw revenue growth of 8%, as the company's houseware business (fueled by the popular OXO brand) grew 10%. In comparison, the personal care business (which is about twice as large) had growth of 7%. Overall, that was a minor miss (about 5%), relative to Wall Street expectations.

Although the top line performance was a bit lacking, the company more than made up for it in expense leverage. Gross margins jumped more than 300 basis points, and adjusted operating income was up 34% from last year. That in turn meant a better than 300 basis point improvement in operating margins, and margins are once again on the higher end of the company's long-term historical range. 


To read the full piece, please click the link below:
http://stocks.investopedia.com/stock-analysis/2010/Helen-Of-Troy-Has-A-Few-Pimples-HELE-PG-UL-CHD-CL1008.aspx