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Should You Invest In Toilet Paper Stocks?

Jimmy Khan

Aug 30, 2022 16:07

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The coronavirus shutdowns have shown that toilet paper is a genuine household need.

 

I never in a million years imagined that I would be writing about stockpiles of toilet paper. But the current situation in the United States surely defies belief.


If you're like millions of Americans, you've visited your neighborhood grocery store only to see shelves that typically contain hundreds of rolls of toilet paper empty or almost empty. People have stocked up on needs due to the new coronavirus outbreak. Additionally, toilet paper is unquestionably a requirement, at least in the United States.


As an investor and investing writer, I'm always searching for patterns that might indicate fantastic investment opportunities. Should you also stock up on toilet paper when many others are feverishly buying it? A serious response is due to this important question.

Cross one thing off the list

Let me start by saying that it is not a smart idea to acquire toilet paper stocks only because of the present frenzy of purchasing toilet paper rolls. There are two causes for this.


First, there won't be much hurry to stockpile toilet paper. I believe some folks have enough T.P. to last them for months—or maybe years—based on what's happening around the nation. If one of the main signs of coronavirus illness was gastrointestinal problems, it would be a different tale. COVID-19. But that's not the case.


Second, you've likely heard the saying "money doesn't grow on trees" before. The remark implies that money (or a desirable alternative object in its stead) is a scarce resource that isn't always available. But trees do grow toilet paper, and once the fear has passed, it won't be a scarce resource.


Just as in the past, toilet paper is being produced. Most of it is produced here in the United States of America. Less than 10% of the toilet paper used in the United States is imported, according to the most recent statistics I could locate on toilet paper imports (yes, someone keeps track of this data).


Do not be concerned that China may harm our economy by delaying toilet paper exports.

Best Stocks of Toilet Paper

Product & General (NYSE: P.G.)

One of the biggest firms that manufacture consumer products is Procter & Gamble.


They manufacture Charmin, a brand of toilet paper renowned for its softness and thickness and one of the biggest in the world.


Mega rolls and flushable wipes are also produced under the Charmin name.


The business also manufactures a variety of other well-known paper hygiene goods, such as Pampers diapers, Tampax tampons, Bounty paper towels, and Puffs tissues.


Procter & Gamble owns more than 60 distinct consumer goods brands.


The corporation now has a market valuation of $326.94 billion, and its goods are sold worldwide.


Since customers were more dependent than ever on their home and personal care goods during the pandemic, it was anticipated that Procter & Gamble shares performed quite well.


After months of consistent rise, its stock price peaked in December before modestly declining the following month despite strong sales figures.


However, this price drop offers investors a fantastic chance to purchase this outstanding company reasonably.


Its price-to-earnings ratio is at 25.09, which is low and suggests that the company may be cheap compared to its financial health.


P&G also offers a solid 2.38 percent dividend yield.


They are a wise option for income investors because of this.


The business is now very lucrative, has a large amount of free cash flow, and has a lengthy track record of raising dividends.


P&G stock has already begun to rise once again.


Before it becomes more costly, it would be wise to purchase this bargain stock right now.


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Walmart (NYSE: WMT)

Investing in the businesses that provide toilet paper is one of the finest ways to benefit from its continued need.


One of the most popular private label toilet paper brands in the U.S. is sold at Walmart.


Despite the epidemic, Walmart has had a respectable year.


They provide a wide range of daily necessities at very cheap costs, which is especially alluring during a recession.


The company's very effective business strategy has also enabled them to weather economic ups and downs.


Their retail spaces were created to have minimal running expenses.


To meet demand, they are also enhancing their online shopping options.


The price of Walmart shares rose steadily in 2020. Late February, nevertheless, saw a decline as the market as a whole tightened.


With such a long track record of achievement, it seems only a matter of time before the price of Walmart stock increases again.


To stay current with emerging trends and increase the accessibility of their goods, they continually reinvest in their company.


Walmart now has a 1.65% dividend yield, increasing its allure as a long-term investment choice.

Costco (NASDAQ: COST)

Another store with a reputation for selling toilet paper is Costco.


Many customers went to Costco during the epidemic's start to buy quantity of toilet paper.


Kirkland, a product of Costco, manufactures bulk packets of toilet paper.


Other tissue and toilet paper brands, such as Scott and Kleenex, are also available in bulk.


This firm stands out from other shops because of its distinctive business approach.


They get a significant percentage of their income from subscription fees, which helps maintain their income stability.


Costco's shares fell early in March due to a disappointing earnings announcement.


Despite strong sales growth, they fell short of analysts' expectations overall.


The fluctuation in oil prices, which impacted Costco's gas sales, was a major factor in this.


However, they saw rapid sales growth and reported especially high performance from their online store.


After this slump, their stock price has already begun to recover.


This year, Costco demonstrated its ability to provide positive long-term effects.


This may be a great way to profit from the continued need for consumer goods like toilet paper.

Suzano

For its paper products, this Brazilian pulp and paper firm create eucalyptus hardwood pulp, which it distributes to other paper producers. Hardwood pulp often has shorter fibers, making it excellent for tissue paper, specialty paper, printing and writing paper, and more.


In Brazil, Suzano produces 25% of the paperboard and 40% of the writing and printing paper. Despite not being the most lucrative sector, Suzano's end markets, particularly printing and writing paper, are continually expanding.


The firm's management thinks that eucalyptus pulp's market share of hardwood pulp is increasing globally. Eucalyptus pulp production in Brazil, which has a shorter growth cycle and a greater yield than other hardwood trees, is the stock's long-term case. We think that we are among the Brazilian pulp manufacturers with the lowest production costs on the international market, according to SEC filings.


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Schweitzer-Maudit

Schweitzer-Maudit, a 1995 Kimberly-Clark (NYSE: KMB) spinoff, will probably appeal to value investors who support its transformation goals. The argument in favor of purchasing the stocks is based on the notion that the company's strategic transformation approach would be aided by the profits and cash flow from the engineered goods (tobacco papers and reconstituted tobacco).


By purchasing resin-based product companies in specialized sectors, the plan is to diversify the business away from the struggling tobacco industry. As a result, Schweitzer-Maudit created a group of precision-engineered performance companies targeted at the industrial and healthcare end markets.


However, since the company often trades at a cheap valuation (and offers a significant dividend yield) due to its exposure to cigarette paper, investors may be ignoring the possibility that the tactic will be successful in the long run.

Resolute Forest Products 

This firm has 40 locations in the U.S. and Canada. Paper (newsprint and specialty papers), the market pulp (8% of total North American capacity), wood products (construction-grade timber), and tissue are among the variety of forestry goods it supplies.


Newsprint is its main end product, and Resolute owns 44% of the capacity in North America and 9% of the capacity globally. The management is concentrating on growing its pulp and wood products operations because of the structural downturn in the newspaper sector brought on by the expansion of online media.


Paper accounted for 57% of sales in 2016, with pulp and wood products accounting for the remaining 40%. However, both proportions changed to 60% and 33%, respectively, as of 2020. Investors would thus be hopeful that Resolute can completely offset decreased revenues of its paper via its plan of switching to pulp and wood products.

Clearwater Paper Corporation 

Unlike Schweitzer-Maudit and Resolute Forest Products, Clearwater doesn't have fundamentally difficult end markets. In its two business sectors, pulp and paperboard and consumer goods create and supply big national stores with private-label tissue, respectively. Its long-term expansion largely depends on capitalizing on the rising market share of private labels relative to branded goods.


The pulp and paperboard division creates bleached paperboards that are used to create a range of consumer goods, including packaging, folding cartons, liquid containers, cups, and plates. The majority of Clearwater's customers are American packaging businesses.


As a result, Clearwater provides investors with a business with more steady end markets. However, it often trades at somewhat higher prices as a result.

Mercer International 

Additionally, Mercer International has two divisions: wood products and pulp. Starting with pulp, Mercer ranks barely ahead of International Paper as the second-largest producer of northern bleached softwood kraft (NBSK, the industry's benchmark pulp). Softwood pulp often has lengthy fibers compared to Suzano's hardwood, and it is used to make stronger goods like newspaper, paperboard, catalogs, and lightweight coated paper.


Mercer is global, given that it has operational assets in Canada, Germany, and Australia and sells 88% of its pulp abroad.


The U.S. and Germany are the segment's two main end markets for the timber products it makes and sells.


Investors may use the company's reasonably secure manner to profit from the pulp market's cyclicality. Pricing is based on the meeting point of supply and demand, just as with other commodities and material inventories.


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Stocks of toilet paper companies

Jennifer Clark (NYSE: KMB)

Consider Kimberly Clark if you're searching for pure-play stock in the toilet paper industry.


They manufacture Kleenex tissues, Huggies diapers, Kotex tampons and pads, Scott and Cottonelle toilet paper, and other well-known brands.


In addition to producing paper goods for commercial use, Kimberly Clark also produces professional wipes and other items for personal hygiene.


Additionally, they provide their Scott and Kleenex goods in quantity for commercial customers.

The firm offers its goods to both corporate and private customers.


They now have many sources of revenue as a result. Additionally, they market their goods in countless other nations.


The price of Kimberly Clark rose substantially in 2019 and 2020.


In 2018, they put a restructuring program into place, enabling them to reduce costs and stabilize their financial situation.


The coronavirus outbreak and the rise in toilet paper consumption further improved their financial situation.


The company's most recent profit reports weren't great since rival Procter & Gamble outperformed them.


Consequently, their stock price fell precipitously, but there are still several important factors to consider before investing in Kimberly Clark.


First of all, the business has been established for about 150 years, and many of its products are well-known reputable names.


Despite a slowdown in pandemic-related demand, these companies shouldn't disappear anytime soon.


Kimberly Clark also offers a sizable dividend.


Their current dividend yield of 3.35 percent suggests it can be a fantastic option for income investors.

Kroger (NYSE: K.R.)

Another major shop where customers may purchase toilet paper is Kroger.


They presently manage 17 retail brands, including the Kroger shops that bear their name, Ralph's, Smith's, Fred Meyer, Food 4 Less, and others.


With thousands of outlets and all of its brands combined, Kroger is the biggest supermarket in the U.S.


They also offer toilet paper under their house and various other recognized brands.


The performance of Kroger stock in 2020 and 2021 has been excellent.


The average consumer is now spending more time at home and going straight to the grocery shop for necessities.


Despite consistent share increase over the last three months, Kroger stock now seems relatively affordable.


The company may be undervaluing its shares with a P/E ratio of only 9.88.


Furthermore, Kroger stock has a very high dividend yield, and their current dividend yield is 1.94 percent.


Kroger can be a company worth adding to your portfolio if you search for reliable long-term profits and a sizable dividend income.

Stocks of toilet paper, pennies

Tech Packaging I.T. (NYSE: ITP)

A Chinese firm called I.T. Tech Packaging manufactures paper goods, including toilet paper.


Face masks made of paper, printer paper, and packing paper are a few of their further offerings.


The company's major material is recycled paper.


Over the last several years, the threat of global climate change has grown, and many people are seeking methods to live more sustainably.


This creates a distinct advantage for I.T. Tech Packaging.


I.T. Tech Packaging is trading for about $0.66 per share, qualifying it as a real penny stock.


Penny stocks may be highly volatile. Thus investors should always use caution while doing so.


However, this could be a stock to watch out for if you're searching for a cheap method to invest in toilet paper.

Should You Purchase Stocks in Toilet Paper?

Toilet paper and other consumer items are often well-performing businesses, even during economic downturns.


This is so because people won't stop purchasing toilet paper even if their money is tight.


This happened at the start of the COVID-19 shutdowns the previous year.


Public-facing firms were being discussed for closure by governments, but we weren't sure how long that would persist.


Customers thus began buying large amounts of toilet paper.


As a result, toilet paper was scarce throughout the U.S. since the supply couldn't keep up with demand.


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Supply and demand eventually stabilized.

However, this demonstrated the significance of everyday necessities like toilet paper in times of economic distress.


Toilet paper firms were doing well even if other equities were failing.


Future crises and downturns are expected to follow this pattern once again.


Because of this, investments in toilet paper companies are a secure long-term investment.


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Toilet Paper Stocks: Concluding Remarks

Toilet paper is a necessary commodity that is always in demand.


Stocks related to toilet paper are a wise choice for gradual portfolio development.