The Clorox Company (CLX): A Bull Case Theory

We came across a bullish thesis on The Clorox Company (CLX) on Substack by Business Model Mastery. In this article, we will summarize the bulls’ thesis on CLX. The Clorox Company (CLX)'s share was trading at $136.80 as of April 16^th. CLX’s trailing and forward P/E were 37.28 and 18.52 respectively according to Yahoo Finance.

Clorox stands as a textbook example of a company with deep-rooted brand strength, operational resilience, and a finely tuned innovation engine—all of which make it a consumer staples powerhouse hiding in plain sight. Over 80% of its revenue is anchored in products that dominate their respective categories, including household names like Clorox, Glad, Kingsford, and Hidden Valley Ranch. This kind of brand leadership doesn’t just win shelf space—it commands loyalty. Cleaning products alone made up 43% of fiscal year 2024 sales, a testament to enduring consumer reliance on trusted hygiene solutions. Glad’s product line, accounting for around 15% of sales, adds another layer of stability—underscoring Clorox’s edge in essentials that remain in demand even during economic downturns. That durability gives Clorox a unique advantage: it doesn’t have to chase fads or cyclical trends to maintain momentum. Instead, it compounds strength by nurturing core brands and leveraging their scale across every retail format imaginable.

Clorox’s dominance goes hand-in-hand with its tight-knit relationships with major retailers. Walmart alone accounts for 25% of sales, and the top five customers contribute nearly half of total revenue. While some might see this concentration as a risk, it actually provides leverage—allowing Clorox to secure optimal shelf placement, cross-brand promotions, and joint marketing opportunities that competitors struggle to match. Its omnichannel reach spans over 100 markets, from mass retail and grocery to e-commerce and warehouse clubs. This strategic breadth ensures that whether consumers are shopping in-store or online, Clorox products remain omnipresent. This adaptability is not just defensive—it’s forward-thinking, as the company expands digital capabilities to mirror consumer behavior shifts and meet demand wherever it emerges.

What amplifies this retail execution is Clorox’s disciplined approach to innovation. Through its IGNITE strategy, launched in 2021, the company introduced a steady stream of new SKUs in FY 2024, from Scentiva disinfecting mists to Brita Refillable Systems and new Hidden Valley flavors. These launches may seem incremental, but taken together they form a crucial growth driver—keeping consumers engaged and competitors at bay. Backing this is a robust $560–$580 million digital transformation initiative that empowers Clorox to act with more speed and precision. Real-time data and improved enterprise planning enhance everything from product development to supply chain management, reinforcing a feedback loop that links consumer trends directly to execution. In effect, Clorox has built a platform for innovation that multiplies the impact of every brand it owns.

None of this would matter if profitability couldn’t keep pace—but that’s where Clorox’s operational excellence shines. Despite pressures like inflation and raw material costs, Clorox has maintained healthy gross margins through programs like the Trademark Cost Savings initiative. This initiative systematically targets cost reduction across procurement, logistics, and manufacturing, allowing Clorox to remain competitive even during disruptive events like the FY 2024 cyberattack. The company not only recovered quickly but used the moment to double down on efficiency—protecting margins while investing further in price optimization, vendor relationships, and digital infrastructure. A streamlined operating model launched in 2024 is expected to generate $100 million in annual savings, building on earlier gains and reinforcing a key advantage: scale-powered cost control that few rivals can match.

Clorox’s ESG leadership adds another layer to its moat. The company operates on 100% renewable electricity in the U.S. and Canada and ranks #1 on Barron’s Sustainability list for the second year. This kind of alignment isn’t just cosmetic—it’s strategic. Consumers increasingly favor brands that reflect their values, and Clorox’s portfolio includes lifestyle labels like Burt’s Bees and Brita that speak directly to this demand. Trust built on environmental and social responsibility helps the company maintain long-term relevance, while enhancing the stickiness of its brands. All told, Clorox offers investors a compelling blend of stability, margin strength, and innovation, all supported by a platform that compounds value over time. It’s not just a defensive stock—it’s a franchise with multiple offensive levers, capable of outperforming across market cycles.

The Clorox Company (CLX) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 54 hedge fund portfolios held CLX at the end of the fourth quarter which was 41 in the previous quarter. While we acknowledge the risk and potential of CLX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CLX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. This article was originally published at Insider Monkey.