Every investor should have exposure to the consumer goods sector. This is even more true when rates are falling and growth is decelerating like now. Colgate-Palmolive Company (NYSE:CL) and Unilever (NYSE:UL) are two of the top stocks in the sector but which is the better buy? CL.Consumer goods stocks deserve a place in every investor’s portfolio. These stocks are often boring but can be big outperformers in the long-term as they have consistent sales and pricing power. Thus, they are less sensitive to economic fluctuations and often pay above-average dividends. Needless to say, the current environment of falling rates and growth expectations is a positive tailwind for these stocks. Sort through the consumer goods stocks and you will find there are plenty of good prospects to pick from. Below, we provide a look at two of the sector’s stars in Colgate-Palmolive Company (CL) and Unilever (UL).
CL makes toothpaste, toothbrushes, and other consumer products, most of which have natural ingredients. CL’s focus on emphasizing its Naturals line is paying considerable dividends as consumers continue to transition to products with all-natural and organic ingredients. It is particularly interesting to note CL has achieved a worldwide household penetration of more than 61%. This means 6 out of every 10 households in the United States use at least one CL product. As a result, CL raked in $16.5 billion in revenue this past year.
CL has a forward P/E ratio of 25.66. This is a slightly elevated ratio. However, CL has priced just below its 52-week high of $86.41 so the ratio is somewhat justified. CL's merits include a low beta of 0.61 that indicates the stock will likely retain its value should the market get rocky.