Can Clorox Stock, a 2020 Darling, Outlast the Pandemic?

The bar is set incredibly low for CLX's next earnings report

Dec 21, 2020 at 10:10 AM
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Clorox Co (NYSE:CLX) stock went on a crazy bullish run as the priority for many Americans as they ramped up personal hygiene and sanitation at the onset of the coronavirus pandemic. CLX scored an all-time high of $239.87 on Aug. 5, but has since shed 5% in the last six months. Now, the shares are consolidating around the $200 level, with several short and long-term moving averages looming above.

CLX Stock Chart

A short squeeze could help break out of this holding pattern. Short interest is lower in the two most recent reporting periods, yet the 13.03 million shares sold short accounts for a healthy 10.4% of CLX's total available float. At the stock's average pace of trading, it would take shorts almost nine days to buy back their bearish bets.

Clorox stock has a forward dividend of $4.44 and a forward dividend yield of 2.19%. CLX last paid a dividend of $1.11. Clorox Company has paid dividends since 1986.

Clorox stock is being set up for some nice gains amid lowered expectations. The company’s next earnings report is not until Feb. 4, but analysts have projected that the company’s earnings will return to pre-pandemic levels for the current quarter. Regardless of the vaccine status, cleaning supplies will be just as essential as it was earlier at the beginning of the pandemic.

Wall Street has placed the bar so low for Clorox stock, almost guaranteeing that the company will beat earnings by a nice margin once again. In addition, analysts may be in for another shock. It is very likely that the increased demand for Clorox’s products will outlast the pandemic. One may argue that people will continue using antibacterial cleaning supplies at a higher rate as people are still driven by the fear of what happened in 2020.  

Clorox stock is currently trading at a price-earnings ratio of 22.58. CLX stock price has been down-trending since July, decreasing about 15%. The current discounted price coupled with Wall Street's low expectations, and a nice dividend yield, make Clorox stock an interesting play for both short-term and long-term investors at this time.

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