Yahoo Finance Why Colgate-Palmolive Company (NYSE:CL) Could Be A Buy
Today we’re going to take a look at the well-established Colgate-Palmolive Company (NYSE:CL). The company’s stock saw significant share price volatility over the past couple of months on the NYSE, rising to the highs of $72.44 and falling to the lows of $61.65. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Colgate-Palmolive’s current trading price of $62.71 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Colgate-Palmolive’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for Colgate-Palmolive
Is Colgate-Palmolive still cheap?
Colgate-Palmolive appears to be overvalued by 20% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$62.71 on the market compared to my intrinsic value of $52.26. This means that the buying opportunity has probably disappeared for now. In addition to this, it seems like Colgate-Palmolive’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
What does the future of Colgate-Palmolive look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 42.66% over the next couple of years, the future seems bright for Colgate-Palmolive. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in CL’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe CL should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on CL for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for CL, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Colgate-Palmolive. You can find everything you need to know about Colgate-Palmolive in the latest infographic research report. If you are no longer interested in Colgate-Palmolive, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
