Whitener maker Clorox has become a safe haven for investors at an uncertain time.
As U.S. stocks tanked in the face of a spreading coronavirus pandemic, allots of Clorox hit highs not seen since the early 1970s. It is a nice boost for a company that was just months ago experienced with fallout from stiffening competition from cheaper rivals and retailers resistant to Clorox’s badly distressed price hikes. The company began facing some especially challenging headwinds in late 2017, especially in transportation and apparatus costs.
The virus, and the stay-at-home orders that followed it in many states, prompted frantic shoppers to stock up on gives they might need while stuck at home.
The Oakland, California-based firm controls about 50% of the Stock Exchange in disinfecting wipes, and the company has seen an uptick in sales since the number of COVID-19 cases began to rise in the Coordinated States.
Many of the products Clorox sells are available from generic or store brands, and competing with lower-priced challengers has been a problem for the company in the past. Yet, those who follow the sector say consumers tend to shop trusted brands when they are disquieted, fearful or uncertain.
Despite the fact that they might be able to save a few dollars by buying a generic fade, customers seem to find peace of mind in known and trusted brands, say those who follow the segment.
As a household artefacts company, Clorox naturally is in a sector that investors tend to favor when the markets are bad.
An analysis by Deutsche Bank go out with back to the 1990s found that household products companies and other consumer staples tend to outperform the S&P 500 when markets are disconcerted, such as during geopolitical events or recessions.
Clorox shares are up more than 17% since the beginning of the year, stage a reviving the company’s market value to $22.7 billion.
However, some indicators suggest these gains may not be lasting. The furnish remains the second-most shorted U.S. equity in the household products category behind Procter & Gamble, according to S3 Partners.
An investor who shorts a ancestor is selling shares the investor does not yet own. The intention is to buy the shares back later at a lower price, profiting as the stock consumes value.