Poisoned toothpaste. It’s a communist conspiracy straight from Dr. Strangelove, Cramer says.
Actually, it looks like a simple case of cost cutting. Chinese toothpaste counterfeiters often use diethylene glycol as a low-cost substitute for glycerin during the production process, and it’s been making people sick, largely across Latin America.
That could leave an open door for Colgate , which Cramer says has a strong presence in the region, but not one that wouldn’t enjoy a little expansion. Half of CL’s sales come from Mexico, but this incident might leave room for the company to move into countries like Panama, Costa Rica, Dominican Republic, Nicaragua and Honduras.
Home Gamers might be wondering about Procter & Gamble, but Cramer says Colgate is a better play for a number of reasons, not the least of which is that it’s a smaller and more focused company. It also beats PG when it comes to both toothpaste market share in the States and percentage of business coming from overseas.
Even better, the new CEO is injecting some life in the brand through innovation. (You didn’t think Cramer would recommend a stock on its toothpaste sales alone, did you?) The company has also restructured itself and is cutting costs. These bold moves could help it cut into PG’s market share as well.
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