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Here's Why One of the Biggest Winners of 2020 Is Still a Buy

By Howard Smith - Updated Aug 12, 2020 at 1:00PM

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Clorox has been supplying critical needs during the COVID-19 pandemic, and has established new partnerships for the future.

Consumer staples businesses have always been considered recession-resistant. The recession caused by the coronavirus pandemic has given suppliers of cleaning products an even stronger boost. Clorox (CLX -0.33%), aided by its strong brand-name recognition, has seen its stock rise by more than 50% since the start of 2020. 

The value of that brand name has compelled companies like United Airlines Holdings (UAL -0.05%) and movie theater operator AMC Entertainment Holdings (AMC 7.56%) to partner with Clorox to gain expertise and provide customers more confidence through new safety and health protocols. 

Clorox packages including brands Glad, Kingsford, and the name brand cleaning products

Image source: The Clorox Company.

Clorox recently reported fiscal fourth-quarter sales jumped 22% compared to the previous-year period. Sales of its health and wellness segment, which includes cleaning products, rose 33%. Importantly for the long-term outlook, the company said in its earnings call that data showed new customers contributed to the majority of the sales growth. 

While the company believes that consumer demand "will remain elevated for some time," it is likely that the magnitude of pandemic-related demand will wane at some point. Regardless, many new health and safety protocols are likely here to stay.

The strategic partnerships that emerged from the pandemic will help drive growth in the company's professional products business. That segment provides cleaning solutions mostly to the healthcare and janitorial sectors. And the company thinks the momentum will continue.

"We believe our brands has broader reach beyond the channels we're in today, and that this business will continue to have significant growth opportunities," Lisah Burhan, vice president of investor relations, said on Clorox's fourth-quarter earnings call.

Clorox's strong brands and expansion into commercial cleaning position it well to continue sales accelerating into the future. 

Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

The Clorox Company Stock Quote
The Clorox Company
$144.61 (-0.33%) $0.48
United Airlines Holdings, Inc. Stock Quote
United Airlines Holdings, Inc.
$38.67 (-0.05%) $0.02
AMC Entertainment Holdings, Inc. Stock Quote
AMC Entertainment Holdings, Inc.
$25.46 (7.56%) $1.79

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