An increasing awareness of health and hygiene matters–at both societal and individual levels–is driving the personal care market’s growth. With an increasing number of customers of both sexes opting for personal care products and products made from natural ingredients, the industry is well-positioned to grow.
Customers’ growing interest in natural, organic, and chemical-free skincare, cosmetics, haircare, fragrance products, and evolving beauty trends, have encouraged companies to launch new products. The global personal care market is expected to reach $148.89 billion by 2025, registering a 5.7% CAGR.
Therefore, we think fundamentally strong personal care stocks The Procter & Gamble Company (PG), Colgate-Palmolive Company (CL), and Edgewell Personal Care Company (EPC) could be ideal picks now. These stocks are now trading near their 52-week highs and still have plenty of upside to deliver.
The Procter & Gamble Company (PG)
PG is a consumer packaged goods company that serves in North and Latin America, Europe, the Asia Pacific, Greater China, India, the Middle East, and Africa. The Cincinnati, Ohio company operates through five industry-based Sector Business Units: Beauty; Grooming; Health Care; Fabric & Home Care; and Baby, Feminine & Family Care. It offers products under Head & Shoulders, Herbal Essences, Pantene, Rejoice, Olay, Old Spice, and various other brands.
This month, Dawn, one of PG’s brands, introduced Dawn EZ-Squeeze, a dishwasher in an innovative container. The company believes that this new product should provide its users with an innovative way to wash dishes and further boost its sales.
PG’s net sales increased 5.3% year-over-year to $20.34 million in its fiscal first quarter, ended Sept. 30, 2021. The company’s gross profit came in at $9.97 billion. Its operating income amounted to $5.02 billion. Also, the company’s net earnings were $4.13 billion.
Analysts expect PG’s revenue for its fiscal year 2022 to be $79.28 billion, representing 4.2% growth year-over-year. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. PG’s EPS is estimated to grow 4.4% in fiscal 2021 and 7.4% in fiscal 2022. Also, closing yesterday’s trading session at $158.29, the stock is currently trading slightly below its 52-week high of $165.32, which it hit on January 6, 2022. The stock has gained 15.3% in price over the past year.
PG’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has a B grade for Stability and Quality. We have also graded PG for Momentum, Value, Sentiment, and Growth. Click here to access all PG’s ratings. PG is ranked #8 of 67 stocks in the Consumer – Goods industry.
Colgate-Palmolive Company (CL)
New York City-based CL is a household and consumer products company that operates in two segments: Oral, Personal, and Home Care; and Pet Nutrition. The company offers toothpaste, toothbrushes, mouthwash, deodorants and antiperspirants, skin health products, dishwashing detergents, household cleaners, and therapeutic products for pets.
During the third quarter, ended Sept. 30, 2021, CL’s total net sales increased 6.3% year-over-year to $4.41 billion. The company’s operating profit came in at $967 million. Also, its cash and cash equivalents grew 7.9% to $958 million for the nine months ended Sept. 30, 2021.
CL’s revenue is expected to increase 3.4% year-over-year to $18.06 billion in its fiscal year 2022. In addition, the company has an impressive earnings surprise history; it beat the consensus EPS estimates in three of the trailing four quarters. Furthermore, its EPS is expected to increase 4.9% in fiscal 2021 and 5.3% in fiscal 2022. Also, closing yesterday’s trading session at $82.54, the stock is currently trading slightly below its 52-week high of $85.61, which it hit on Jan. 5, 2022. The stock has soared 8.5% in price over the past three months.
CL’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The stock has an A grade for Quality and a B grade for Stability.
Edgewell Personal Care Company (EPC)
EPC is a global manufacturer and marketer of personal care products that operates through Wet shave; Sun and Skincare; and Feminine care segments. The Chesterfield, Miss., company’s subsidiaries include American Safety Razor Australia Pty. Limited, Ltd., Edgewell Personal Care Canada ULC, Schick Cayman Islands Ltd., and others. EPC’s portfolio consists of over 25 brands in more than 50 countries.
Last November, EPC acquired Billie Inc., the U.S.-based consumer brand company, in a $310 million all-cash transaction. EPC believes that the acquisition should enhance EPC’s consumer-centric, digital capabilities and should also elevate EPC’s presence in the important mid-tier value segment of the women’s shaving market in the U.S.
EPC’s net sales increased 11.1% year-over-year to $543.2 million in its fiscal fourth quarter, ended Sept. 30, 2021. The company’s gross profit grew 10.2% from its year-ago value to $244.8 million. Its operating income rose 53% from the prior-year quarter to $63.2 million. Also, the company’s net earnings increased 110% year-over-year to $44.1 million.
For its fiscal 2022, EPC’s revenue is expected to be $2.15 billion, representing a 2.9% year-over-year increase. The company has surpassed the consensus EPS in each of the trailing four quarters. Its EPS is expected to increase 4.3% in its fiscal 2021 and 6.7% in fiscal 2022. The stock has surged 46.9% in price over the past year. Also, closing yesterday’s trading session at $50.26, the stock is currently trading slightly below its 52-week high of $50.71, which it hit on Jan. 12, 2021.
It is no surprise that EPC has an overall B rating, which equates to a Buy in our POWR Rating system. Also, the stock has an A grade for Growth and a B grade for Value.
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PG shares were trading at $158.88 per share on Friday morning, up $0.59 (+0.37%). Year-to-date, PG has declined -2.87%, versus a -2.49% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research. More...
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