Pros and Cons of Investing in Colgate-Palmolive

OVERVIEW

Colgate-Palmolive Company is a company based in the United States. The company designs, manufactures, and sells consumer personal care products and pet nutrition supplies in countries around the world. The company operates under the Colgate, Palmolive, Hill’s Pet Food, and many others. The company was founded in 1806.

PROS:

  1. Colgate-Palmolive is a great reopening play in an investor’s portfolio. The company will see a rise in demand for some of their personal care products as well as other commercial products as the economy reopens and as people go out once again. This will benefit the company’s sales and recovery. This will also benefit investors.
  2. Colgate-Palmolive is a recession-proof investment in an investor’s portfolio. The company will see stable if not rising sales in a recession due to the essential nature of the personal care and pet nutrition products that it sells. For example, regardless of the economic times, consumers will still purchase toothbrushes and toothpaste. This will benefit the company.
  3. Colgate-Palmolive sells a wide range of products to customers. From personal care products like toothbrushes and toothpaste to dog food and other pet nutrition products, the company operates a diverse set of growing businesses. This has benefited the company and its investors.
  4. The company has reported rising revenues and profits over the past couple of financial years due to the reasons mentioned above. This has helped the company grow its core business and make critical acquisitions. This has also benefited investors in the company. In the financial year of 2020, the company reported revenues of around 16.47 billion and profits of around 2.69 billion. Both of these metrics are higher than what the company reported in the financial year of 2019 when they reported revenues of around 15.69 billion and profits of around 2.37 billion.

CONS:

  1. The company faces tough competition in the personal care industry. Some of these competitors include Procter and Gamble, Nestle, Unilever, and many others. This competition might hurt the company and its investors in the future.
  2. The COVID-19 pandemic has hurt some aspects of the company’s business. Supply chain issues as well as rising commodities costs (something that I will talk about in the next slide) have hurt the company. Lower demand for commercial products also hurt the company. The pandemic will continue to impact the company until most countries fully reopen.
  3. Inflation will continue to hurt the company as the economy reopens until price levels return to normal. Inflation has caused the price of raw materials found in most Colgate-Palmolive products have risen in price. This has caused the company to raise prices on some products and have a lower profit margin. This has also hurt investors in the company.

MY OPINION

I think that Colgate-Palmolive is a great long-term play due to its position as a good reopening play, its position as a recession-proof investment, a wide range of products, as well as rising revenues and profits. However, tough competition, negative impacts from the pandemic, as well as inflation might hurt the company and its investors.

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Aaditya Patel

Aaditya Patel

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.