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Leigh Baldwin & Co.

112 Albany Street, Cazenovia, NY 13035 | Phone: (315) 655-2964 Toll Free: 1-800-659-8044

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Stock of the Week

Kimberly Clark

March 26th 2010 Kimberly Clark
NYSE Symbol: KMB
Industry: Consumer Goods
Price as of 3/26: $62.81

The markets have been up, up, and away. This week the Dow hit 10,900 for the first time since October 2008. The financials have broken out this week to new recent highs. The semiconductors are starting to heat up. Qualcomm raised guidance on Thursday. Last weeks' featured stock, commodity play Cliffs Natural Resources is already up 10% since last Friday. Everything is working which is why I'll be a contrarian and feature a blue chip conservative dividend paying stock. This week's featured stock is consumer goods maker, Kimberly Clark. Kimberly-Clark which owns such popular name brands as Kleenex, Scott, Cottonelle, Huggies, and Pull-Ups reaffirmed earnings guidance this week of $4.80-5.00, verse consensus estimates of $4.87. Another positive sign as been insider buying, in particular, a director bought 5,000 shares at around $60 a share back in February. Kimberly Clark also increased their quarterly dividend to 66 cents a share, another bullish sign that business is improving. Kimberly Clark is not a growth stock, but a blue chip that is performing well and providing a great dividend of 4.2%.
The Dallas-based Kimberly-Clark reported lackluster earnings back in January. Price hikes and the cold and flu season helped the company earn $1.16 per share, or $492 million, up from $419 million last year. The maker of Huggies and Kleenex saw an 8% jump in sales during the quarter, bringing net sales to $4.8 billion. Global concern over the spread of the H1N1 virus benefited the balance sheet, with increased demand for face masks resulting in a 6% increase in health care sales. Overall sales of health care products jumped 22% during the quarter. Personal care product sales increased 11%, although only 1% in North America. The company improved its market share and sales of Huggies diapers, as well. Management anticipates a slow and modest economic recovery in 2010. Organic sales volumes are expected to grow 2 to 3% after being down slightly in 2009. To reduce costs, Kimberly Clark reported that it cut 1,600 jobs. The company will pay $6 million in severance and related costs. The company also plans to resume its share repurchase program, buying back between $500 million to $600 million of stock this year.
Following the earnings, Kimberly Clark's stock sold off, but has recently started to perk up once again after they reaffirmed their numbers. Currently the stock is trading 13 times earnings, 12 times next years numbers. The stock also trades for 1.3 times sales, and 5 times book value. The next dividend won't come until June, but investors looking for a stable company paying a great dividend after the recent run up in the averages should take a look at Kimberly Clark.