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Do Personal Care Stocks Look Good for Today's Investors?
 In the 1980s, Billy Crystal, playing Fernando on Saturday Night Live, had a catchphrase that can easily be applied today's personal care sector: "You look mahvelous." In every sense, this group looks good in the face of extreme market uncertainty. In fact, it has outpaced the broader markets year-to-date.
The outperformance of the personal care industry, which includes personal care and hygiene products such as cosmetics, perfumes, and toiletries, is mainly because of these factors:
- Consistent performers (like Gillette and Alberto-Culver)
- Investor attraction to defensive sectors (particularly in times of uncertainty)
Do analysts expect the personal care group to continue cleaning up? While many believe that certain multinationals within the industry, such as Avon and Gillette, could be subject to deeper investor scrutiny due to ongoing global economic doldrums, current fundamentals suggest continued growth for the overall sector in the near and medium term:
- Improved financial results (due to solid volume gains, restructuring and cost-cutting initiatives)
- Clear-cut business models
- Transparent financial statements
- Ongoing demand of defensive-minded investors
- Reasonable raw material prices
The longer-term outlook for the personal care sector is also favourable. Here's why investors, particularly the more cautious ones, will find this group very appealing in the coming years:
- Everyday nature of the products within the industry (which translates into ongoing stability)
- Faster-than-average growth rates (compared to other mature industries)
- Continued innovation (leading to line extensions and new product launches)
- Increased awareness about health and well-being
What's the bottom line? Solid, clear-cut business models and ongoing innovation, coupled with other appealing short- and long-term fundamentals, have groomed personal care stocks for continued growth in the coming months and years.
Some of the stocks that fall into this group include the following: Alberto-Culver, Avon, Colgate-Palmolive, Concert Industries, Estee Lauder, Gillette, Kao, Kimberly-Clark; L'Oreal, NBTY, Procter & Gamble, Shiseido, Technology Flavors & Fragrances and Unilever.
E-mail: invest@barkermoney.com
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