By Peet Serfontein & Hashmeel Suka
Church & Dwight is a household and personal-care goods company based in the US. The group manufactures and sells a wide range of chemicals, cleaning, healthcare, and food products, with major brands such as Arm & Hammer, XTRA, OxiClean, Nair, Orajel and Trojan.
Growth over the past five years has been solid, with revenue and adjusted EPS increasing 7% each year (on a compounded annual basis). This has been driven by steady consumer demand, given their strong brand reputation and dominant market share positions. Ongoing product innovation as well as rapid e-commerce expansion have also provided good support.
Technically, the stock is trading in a rising wedge pattern (refer to the fist chart), characterised by two upward sloping trend lines that converge based on a series of higher highs and higher lows. It is regarded as a bullish indicator, reflecting solid demand from investors given healthy fundamentals and positive market sentiment.
The current trend angle (~15.6 degrees) is also seen as a bullish sign, particularly in the context of long-term price stability. This angle is indicative of steady price appreciation amid lower volatility, which is attractive.
Trade of the stock continues around the 200-day simple moving average (SMA) of ~$103, and this makes for an attractive entry point given expectations of a further push toward the upside.
Fading downside momentum (according to the MACD indicator) as well as sidewards movement of the On-balance Volume indicator, supports our bullish stance.
Share Information
| Share Code | CHD US |
|---|---|
| Industry | Household & Personal Products |
| Market Capital (USD) | 25.5 billion |
| One Year Total Return | 21.24% |
| Return Year-to-Date | 11.06% |
| Current Price (USD) | 104.14 |
| 52 Week High (USD) | 110.31 |
| 52 Week Low (USD) | 86.23 |
| Financial Year End | December |
| The stock has appreciated firmly over the past year, with various technical indicators suggesting further upside to come. | |
Consensus expectations
(Bloomberg)
| FY23 | FY24E | FY25E | FY26E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | 3.17 | 3.44 | 3.73 | 4.01 |
| Growth (%) | 8.52 | 8.46 | 7.45 | |
| Dividend Per Share (USD) | 1.09 | 1.13 | 1.18 | 1.25 |
| Growth (%) | 3.85 | 4.33 | 5.50 | |
| Forward PE (times) | 28.24 | 26.25 | 25.98 | |
| Forward Dividend Yield (%) | 1.09 | 1.13 | 1.20 | |
| Earnings growth is expected to remain strong over the medium-term. | ||||
Buy/Sell Rationale
Technical Analysis:
Fundamental view:
| Share Name and Position | SYY US - Time Exit (Close the position) |
ABSI US - Time Exit (Close the position) |
DELL US - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 75.19 | 3.79 | 123.78 |
| Current | 76.35 | 4.05 | 133.46 |
| Movement | +1.5% | +6.9% | +7.8% |
| We have reached our intended time-exit for this stock. | We have reached our intended time-exit for this stock. |
Price action in Wave 5 of the Elliott Wave pattern remains of interest. The stock remains above its 200-day simple moving average, with upside price momentum offering good support.
Our profit target is $148, with a trailing stop-loss of $117. Exit trade by 10 January 2024. |
| Share Name and Position | AMZN US - Buy (Continue to hold) |
APH US - Buy (Continue to hold) |
ABNB US (Continue to hold) |
|---|---|---|---|
| Entry | 187.00 | 66.85 | 132.50 |
| Current | 199.50 | 69.71 | 137.82 |
| Movement | +6.7% | +4.3% | +4.0% |
|
A Piotroski F-score of seven continues to be of interest. The stock remains above its 200-day simple moving average. Emerging upside momentum is supportive.
Our profit target is $217 with a trailing stop-loss at $187.30. Exit the trade by 13 December 2024. |
A bullish flag pattern remains of interest. Trade continues above the 200-day SMA with emerging upside momentum offering support.
Our profit target is $76, with a trailing stop-loss of $63. Exit the trade by 29 January 2025. |
Price action within a developing upward channel pattern remains of interest. The stock remains just below its 200-day simple moving average (regarded as a counter-trend strategy). Upside price momentum is supportive.
Our profit target is $153, with a trailing stop-loss at $129.50. Exit the trade by 11 December 2024. |
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