Perspective is essential when investing. For example, market participants who are scoping out consumer packaged goods stocks as potential rebound opportunities for 2026 may be on to something, because that group of stocks has been battered and bruised this year.
Perspective kicks in when one realizes that even if consumer staples stocks rally next year, their returns are unlikely to look like those that investors have grown accustomed to from the "Magnificent Seven" and equities of that ilk.
Image source: Getty Images.
That's worth remembering as it pertains to Colgate-Palmolive (CL 1.05%). It's down by about 15% year to date, but given its respectable fundamental picture, the Irish Spring maker could be a credible rebound candidate in 2026. However, investors should temper their expectations, because even if that positive scenario materializes, Colgate-Palmolive won't behave in story stock fashion.
Silver linings for this consumer staples giant
A 15% year-to-date loss at a time when broader benchmarks are flirting with all-time highs may be enough to cause some investors to write off Colgate-Palmolive, but there are some sparks that could become the flames of a 2026 comeback.
Some experts say the stock now trades at bargain levels. And importantly, it doesn't have the hallmarks of a value trap, in part because it has dramatically reduced the time it takes to bring new products to market. Based on the results, that haste is apparently fine with consumers: Colgate-Palmolive has tallied 24 straight quarters of meeting or beating its organic sales growth objective of 3% to 5%.
Potentially bolstering the case for a Colgate-Palmolive stock resurgence next year is the possibility of a more cooperative macroeconomic environment. If inflation cools, that could stoke upside for the stock because the company contends with significant raw materials costs.
Meanwhile, analysts at Goldman Sachs note that while there are concerns about the state of U.S. consumers overall, middle-income consumers are "doing fine" -- and if that group starts feeling more comfortable about their finances, that could improve Colgate-Palmolive's business as well. Said another way, if middle-income consumers feel more sanguine about the economy, more of them may choose to shift from lower-priced private label products back to Colgate-Palmolive's premium brands.
NYSE: CL
Key Data Points
Another fundamental factor that could make it easier for investors to wait for a rebound by Colgate-Palmolive is the company's impressive track record of free cash flow (FCF) growth. Over the past five years, the Speed Stick maker has generated mid-teens FCF as a percentage of sales, and it is possible it could do even better in the years ahead.
Colgate-Palmolive stock odds and ends
Income investors know that a big part of the reason to consider Colgate-Palmolive is its dividend. With a 63-year streak of payout increases, the company is a Dividend King, and 2025 was the 130th straight year in which it paid dividends.
Plus, the company unveiled a $5 billion share repurchase program, signaling that management may see value in the shares.
Finally, just because Colgate-Palmolive operates in a sleepy sector doesn't mean it's stuck in the stone age: Morgan Stanley points to the company as one of the artificial intelligence (AI) winners among consumer staples firms. AI-related benefits could take time to be factored into the stock price, but Colgate-Palmolive is displaying a willingness to tap the latest technology to improve its efficiencies and, potentially, its profits. That could fortify its case for a rebound -- but investors should not expect AI-sector-like returns from this stock.
