We recently published an article about the 8 Best Cleaning Materials Stocks To Invest In Now. Let’s look at where Ecolab Inc. (ECL) stands against other cleaning materials stocks to invest in now.
Investors are reacting to an array of geopolitical and economic developments as volatility in the US equity market edges higher heading into year-end. The upcoming US election is posing a significant headwind that is taking a toll on sentiments in the equity markets. Similarly, concerns of a slowing economy crumbling amid high interest rates is also leading investors to rethink their investment portfolios.
Will the Soft Landing Narrative Play Out the Way Investors Want?
On October 16, Saira Malik, Nuveen CIO and head of equities and fixed income, joined CNBC’s ‘Squawk Box’ to discuss the latest market trends, whether the soft landing narrative will play out, and the state of the economy, among others. She said that concerns exist over whether the soft landing narrative will play out the way investors want or not.
Investors are drinking the Kool Aid when it comes to a soft landing, and that can be seen in the earnings seasons so far where companies are coming in reasonably strong, especially in the non-tech side. The consumer also looks strong. But the bar is pretty low for this earnings season, with a 4% year over year earnings growth expected as compared to last quarter’s 11%. Thus, Malik is of the view that the narrative might not play out exactly the way it was anticipated.
How to Hedge Your Portfolio Amid Market Volatility
On August 8, Tiffany McGhee, CEO and CIO of Pivotal Advisors, appeared on CNBC to discuss the market’s volatility and ways to hedge your portfolio. She expressed her inclination towards holding a diversified portfolio and an asset allocation strategy set. She said that it is really exciting getting caught up in the large-cap growth stocks that really drive the performance of the market for so long. But it is really important to have a balance portfolio, and thus she reiterated that investors should really consider having defensive stocks if they don’t have any.
Defensive stocks have long been a popular addition to portfolios, as they hold the potential to protect investors from the transitions of the stock market. They can produce good income, stable returns, and pose long-term value for investors.
Our Methodology
To ranks the 8 best cleaning materials stocks to invest in now, we used the Finviz screener, ETFs, and online rankings to first identify the top cleaning material stocks. We then selected 8 stocks that were also the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of their hedge fund holders as of Q2 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Ecolab Inc. (NYSE:ECL) offers cleaning and sanitizing products and operates in four segments: Global Industrial, Global Institutional & Specialty, Global Healthcare & Life Sciences, and Global Pest Elimination.
The company is on the path to growth. It experienced a 35% adjusted earnings growth in Q2, with 25% to 29% earnings growth expected for the entire year. Its robust business momentum continued in Q2, delivering for its customers and shareholders. Organic sales growth stayed in its previously forecasted 4% to 5% range, with performance across the rest of the company’s segment improved.
This growth continues to be leveraged by its exceptional organic operating income margin expansion. With solid top-line momentum and its operating margins expanding towards the 20% target, Ecolab Inc. (NYSE:ECL) is on the path to attaining its long-term 12 to 15 earnings growth trajectory.
To support its long-term growth journey, the company is taking on its One Ecolab initiative that will help fuel 5% to 7% long-term organic sales growth and continue the expansion of its operating margins towards 20% and beyond. The company ranks fourth on our list of the 8 best cleaning material stocks to invest in now.
Mairs & Power Growth Fund stated the following regarding Ecolab Inc. (NYSE:ECL) in its fourth quarter 2023 investor letter:
“All of our Materials holdings—Ecolab Inc. (NYSE:ECL), HB Fuller (FUL), and Sherwin Williams (SHW)—also posted strong results in 2023, a stark reversal from the prior year. After oil prices spiked above $100 in 2022 due to the Ukraine-Russia Conflict, oil has since pulled back to the low $70s. Oil and its by-products are major inputs for all of our Materials holdings; as such, lower oil prices have led to a rebound in profits. For example, our largest Materials holding—Ecolab—is expected to increase earnings more than 15% this year after declining 5% last year.”
Overall, Ecolab Inc. (NYSE:ECL) ranks 4th among the 8 best cleaning materials stocks to buy now. While we acknowledge the potential of ECL to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ECL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
