Colgate-Palmolive is a familiar name to many investors. After all, you’ve probably passed many of its products in the grocery aisle, and likely put some of the items in your cart before you’ve headed to the checkout aisle.
Investing in companies that you understand is always good, and it is one of the key tenets of famed investor Peter Lynch’s investing guidelines. However, mere familiarity is not enough to decide that the stock is a worthy investment.
Strong brand recognition
Under its leading Colgate brand, the company sells toothpastes and toothbrushes. These products garnered an impressive 41% of the market in 2019. It also sells popular soaps, deodorants, dishwashing liquids, and cleaners under powerful brands like Palmolive, Speed Stick, and Ajax. Then, there’s its pets nutrition business whose offerings are geared toward dogs and cats.
These are well-recognized brands that have strong reputations. Its entire product lineup has stable demand throughout the economic cycle, too. While you may cut back on vacations or big-ticket items, undoubtedly you aren’t going to cut down on your purchases of toothpaste or deodorant even if you lose your job. On top of that, it is not overly reliant on one country, since the company sells its goods in more than 200 countries and garners more than 70% of its sales from outside the U.S.
