Clorox: A Healthcare Twist

11/05/2014 8:00 am EST


Gordon Pape

Editor and Publisher, The Income Investor and the Internet Wealth Builder

While traders have looked at speculative plays on the Ebola crisis, Gordon Pape, editor of Internet Wealth Builder, instead turns to a conservative, blue chip stock.

Ebola in West Africa is a major humanitarian disaster. There has been a huge spike in some stocks that, in theory, could gain from the Ebola scare.

The two main areas of speculation are in the protective clothing area and in companies that produce experimental vaccines.

The stock I'm recommending this month, Clorox (CLX), has a division that produces protective clothing for hospitals.

But the great thing about buying Clorox is that, even after this Ebola scare is over, the company will still be with us. So, your downside risk is significantly less than with the highly speculative issues involved in this area.

You probably didn't know about Clorox's protective clothing division but most of you will be familiar with their famous bleach products. These are being consumed in massive amounts throughout Africa, although it should be noted that the company donated a fair amount of that product as a humanitarian gesture.

Clorox also makes disinfecting wipes, which are in high demand as well. The company has good penetration into the healthcare markets, with most of their brands holding the Number One or Number Two positions in their categories.

In addition to the healthcare sector, Clorox has a number of household products that you'll be familiar with, including Pine-Sol, Liquid Plumber, Kingsford Charcoal, Burt's Bees, Brita water filtration products, and Glad Bags, to name a few.

The company has over 8,400 employees operating all around the world except for Venezuela, which it wisely exited given the price controls and out of control inflation that the wacky government there has fostered.

Clorox is a slow but consistent grower, pays a 3% dividend, and recently confirmed guidance for the rest of 2014. Sales last year exceeded $5.6 billion.

On top of all this, the company is often rumored to be a takeover target by Colgate-Palmolive or Proctor & Gamble (PG).

So long after the Ebola scare has passed, Clorox will be carrying on. Given the recent volatility in the market, a slow growing dividend payer is not a bad place to hide out. Buy with a target of $115.

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