Colgate-Palmolive (NYSE: CL) stock price has jumped in the past six straight weeks, pushing it to its all-time high of almost $90. It has jumped by more than 25% in the past 12 months, outperforming the Vanguard Consumer Staples (VDC) ETF, which is up by 12%. The company’s market cap has soared to over $72 billion.
Dividend kingColgate-Palmolive is one of the biggest consumer companies in the world. It is also one of the most recognisable brands globally. It provides products in the oral, personal care, and home care segments. It also has a large pet nutrition business.
Colgate has been doing well over the years, thanks to its well-known brand and the growing middle class, especially in the emerging markets. As a result, its total annual revenues have jumped from $15.9 billion in 2019 to over $19.4 billion in 2023.
Colgate-Palmolive’s recent results showed that its organic sales rose by 7% in the fourth quarter. It also increased all its margins, with the base business gross margin rising by 400 basis points. Its operating cash flow also rose by 47% in 2023.
Colgate is facing several headwinds. The biggest one is that its business is expected to have slow growth this year. The management expects that the net sales growth will be between 1% and 4% even as it increases its marketing budget.
Further, the company is also facing cost issues as the prices of raw materials remain stubbornly high. It has offset these costs by increasing efficiency across all its business lines.
The other challenge is that competition in its business is growing around the world. Most of this competition is coming from companies like Procter & Gamble, Haleon, and Church & Dwight. There are also many upcoming Asian brands.
Still, on a positive side, Colgate-Palmolive is a dividend king, which has boosted its payouts for over 60 years. It is part of the 56 such companies. Its dividend is significantly safe considering that the company has a payout ratio of just 59%.
The other benefit is that inflation is falling around the world. Data on Wednesday revealed that UK inflation dropped to 3.4% in February. This means that central banks will likely start cutting rates, which will benefit consumer spending.
Colgate-Palmolive stock price analysis
A look at the weekly chart shows that something important happened in January. The CL stock price managed to move above the crucial resistance point at $81. It had struggled to move above this price between November 2020 and May 2023.
The Colgate-Palmolive share price has surged above the 50-day moving average, signalling that bulls are in control. Also, the Relative Strength Index (RSI) and the Stochastic Oscillator have moved above the overbought level. Therefore, the outlook for the stock is bullish, with the next point to watch will be at $100.
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