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Tuesday, March 2, 2010

Colgate Palmolive - FMCG Stock For Steady Growth

Colgate Palmolive, a wellknown brand you might be using everyday, did you ever thought of buying stocks of this toothpaste, toothbrush and shaving cream manufacturer.

After stagnating through most of the 1990s and early 2000s, Colgate Palmolive (India) suddenly turned around in 2004 with a better product portfolio, improved advertising and cost cuts. The stock was languishing at Rs120 then.

It trades above Rs700 now. Shareholders have earned a 446% return over the same period. Colgate had always earned high RoE—an average of 86% over the past five years. Its sales and operating profit for the September 2009 quarter grew 17% and 61%, respectively, compared to the year-ago period.

The time to buy stocks of Colgate is when the market-cap comes down to 1.6 times sales and 9 times operating profit.

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