Shares of Kimberly-Clark (NYSE: KMB) hit a 52-week high yesterday. Let's look at how it got here and whether clear skies are ahead.

How it got here
For the last month Kimberly-Clark has been touching new highs, not driven by recent results but in a flight to safety. The last time we reported on a new high it was a stellar earnings report that the market was reacting to. But since then the market has gone through a very rough month and yet Kimberly-Clark marches higher. Why?

As the market worries about what impact the European situation will have on companies, how slower growth in China will affect the world, and whether or not we'll ever exit this economic funk, there's been a flight to safety. What could be safer than diapers, tampons, toilet paper, and Kleenex? These products will sell in any market and will be needed around the world.

Based on the numbers below, Kimberly-Clark actually looks more expensive than it did after its last earnings report. The rising stock hasn't been driven by rising earnings, just an expanded earnings multiple, and it's becoming expensive compared to peers. Johnson & Johnson (NYSE: JNJ), Procter & Gamble (NYSE: PG), and 3M (NYSE: MMM) all have better margins and all but Procter & Gamble have lower forward P/E ratios.



Return on Assets

Profit Margin

Forward P/E

Kimberly-Clark 1.5 9.3% 8.1% 15.0
Johnson & Johnson 2.7 9.0% 15.6% 12.0
Procter & Gamble 2.0 7.4% 11.3% 15.3
3M 2.0 12.3% 14.5% 12.4

Source: Yahoo! Finance.

The flight to safety makes some sense, but eventually operations have to catch up to valuation. Kimberly-Clark only grew 4.2% last quarter, not enough to maintain the valuation it currently has.

What's next?
I don't think Kimberly-Clark is the kind of stock that will shoot higher in the near future, but if the economy continues to bumble along and Europe continues to run into problems, I do think it can outperform the market short-term. Safety is something investors seek in times like these, and I think they'll be looking for a lot of safety until at least after the U.S. presidential election.

Just how high can Kimberly-Clark go? Don't expect a lot. A potential forward P/E of 18 would make me a little uneasy, so I see upside limited at another 10% to 15% unless growth picks up in the second quarter for some unknown reason. This may be a great stock to own in bad times, but don't mistake it for a growth stock.

Interested in reading more about Kimberly-Clark? Click here to add it to My Watchlist, which will find all of our Foolish analysis on this stock.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

The Motley Fool owns shares of Johnson & Johnson. Motley Fool newsletter services have recommended buying shares of Procter & Gamble, 3M, Kimberly-Clark, and Johnson & Johnson. Motley Fool newsletter services have recommended creating diagonal call positions in 3M and Johnson & Johnson. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.