Pros and Cons of Investing in Colgate-Palmolive

PHOTO CREDIT: Colgate-Palmolive

OVERVIEW

PROS:

  1. 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.
  2. 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.
  3. 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.
PHOTO CREDIT: Yahoo Finance

CONS:

  1. 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.
  2. 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

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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.

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Aaditya Patel

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