During the onset of the Coronavirus pandemic in the US, it was common to walk into your local store only to be welcomed by empty shelves. You see, previously, you would find aisles filled with hundreds of tissue paper rolls.
This only makes us wonder how viable the toilet paper industry is. As an investor, should I expect great returns if I decide to stock up on toilet paper stocks?
If this is a question that has been nagging you, you are in luck, because this is the focus of this article.
We are going to discuss everything you need to know about these stocks and the best ones to invest in. So, stay here to find out more.
Why Toilet Paper Stocks?
The high demand for toilet papers brought about by Covid-19 should not be the only reason you should invest in the stocks. The mad rush and empty shelves were just a temporary frenzy that will die out soon.
The first thing you should note about tissue papers is that their demand will always be there, even in normal times. Visiting the toilet is a part of life, and you will have to use the commodity. This is unless you are the filthiest person alive!
What’s more? Tissue paper is an unlimited resource that literally grows on trees. So, even when there are no panic or gastrointestinal outbreaks, it will always be there, ready to hit the markets.
Their manufacturing is still ongoing in the US, although some products from China seem to find their way into the local market.
However, we doubt if the Chinese will ever be successful in crippling our local tissue paper industry.
Top Bathroom Tissue Stocks Companies
In this section, we shall look at the best toilet paper stocks in the market that are worth considering. And if you invest in any of these companies, you would have discovered a smart way of generating stable long-term returns.
Here is our analysis:
I) Procter and Gamble (PG)
Most of us associate Procter and Gamble with Charmin, which happens to be one of the top toilet paper firms globally. As for the product itself, most of its customers are pleased with its texture which is quite soft and thick.
Tissue papers aside, the company also manufactures numerous paper hygiene products such as Pampers diapers, Bounty paper towels, Tampax tampons, and Puffs tissues.
PG has a global customer base, and as a result, the company has a market capitalization of $326.94 billion.
During the pandemic, the company’s stock did quite well, registering its highest point in December before taking a slight dip. This slump should not be taken negatively as it presents you with an opportunity to buy the stock at a lower price.
At the moment, it has a relatively low P/E ratio of 25.09 and a dividend yield of 2.38%. From this, we can tell that this is a highly profitable firm plus it has a history of increasing its dividends.
II) Walmart (WMT)
Walmart presents us with a unique way of investing in the toilet paper industry. This is whereby rather than investing directly in the company’s manufacturing the product, you could invest in the stores selling it.
As you may already know, Walmart Inc is in the business of retail, wholesale and other units globally.
One of the reasons why the company manages to survive different economic climates is its efficient business model.
Just like other companies in the industries, Walmart shares rose throughout 2020. This was before taking a dip sometime in February. However, given its successful history, we don’t think it will be long before the stock rises again.
By the time we came up with this piece, the company had a market cap of $398.6 billion and a P/E ratio of 32.92. In addition to that, it has a dividend yield of 1.65%, making it a viable option for long-term investors.
III) Kimberly Clark (KMB)
Next up is a company that is behind renowned toilet paper brands such as Cottonelle and Scott. Besides that, Kimberly Clark has other notable products, including Huggies diapers, Kotex pads, and Kleenex tissues.
The company’s customer base includes both businesses and individuals to give it multiple income streams. Also worth mentioning is that KMB sells its products to numerous countries around the world.
Even though Procter and Gamble is the main competitor, there are several reasons why we consider KMB to be a safe investment. First, the fact that it has been around for about 150-years is enough to point out its reliability.
Then, it has an impressive dividend yield of 3.35%, appealing to income investors. Most of all, the company was able to survive the complications brought about by the pandemic. Therefore, you should not expect it to go down any time soon.
IV) Barnes Group (B)
Barnes Group Inc. operates in the Industrial and Aerospace sectors of the economy and provides engineered products to its clients in the US and across the globe.
It is one of the best toilet paper stocks you could add to your portfolio, with a market cap of $2.591 billion and a P/E ratio of 49.3.
V) Edgewell Personal Care Company (EPC)
This is a company that has made its name manufacturing and marketing personal care products. However, its operations are based on three categories, including feminine care, wet shave, and sun and skincare.
Basically, it operates through the three segments mentioned above and has clients in the US and the international market.
EPC has a market capitalization of $2.248 billion and a P/E ratio of 39.353, and this should entice any investor to add the stock to his portfolio.
VI) Kroger (KR)
Just like Walmart, Kroger is a retailer that provides areas where you can purchase toilet paper. Its operations are based in seventeen different chain stores such as Food 4 Less, Kroger Stores, and Fred Meyer.
Kroger is the most established store in the US, having countless locations and even selling their own brand of tissue paper.
The Covid-19 pandemic meant that many people spend more time at home and purchasing their essentials straight from the grocery store. This contributed to an impressive performance in 2020 and 2021, although the Kroger stock seems to be quite affordable at the moment.
It has a low P/E ratio of 9.88, which implies that the stock could be undervalued. Further, Kroger stock comes with a strong dividend yield of 1.94%.
The combination of a significant dividend income and steady long-term returns is just of the reasons why you should consider adding Kroger stock to your portfolio.
How to Buy Paper Towel Stocks
Now that you know the top toilet paper stocks to go for, how do you buy them? Below is a simple guide detailing how you can go about the process. And it is more straightforward than you could ever imagine.
*Find the right share trading platform
The first important step is finding the top brokers to do the hard work for you. Your selection should be based on their fees and bonuses.
*Opening and funding your Brokerage Account
Next, you will have to open and fund your brokerage account. After that, you’ll need to submit your personal information such as contact and bank details.
*Search for your Ideal Stock
Here, you will have to find the stock you are interested in. You could do so by name or ticker symbol such as BLW.
*Settle on the amount you Intend to Purchase
It all depends on the rules set by the broker. For instance, some insist on you buying whole shares while others allow you to purchase fractional shares.
*Choose the order Type
Here, you have the option of investing in toilet paper stocks with a market order. You could also use a limit order to delay your purchase until the stocks attain the price that you find ideal.
*Purchase the Stock
The final step involves buying the stock, whereby you only tap or click the Buy button on your brokerage account. And once you are done with the buying process, you should make a point of tracking your stock’s performance. This way, you will know the right time to sell.
Should I Buy Toilet Paper Stocks?
One thing about toilet paper companies is that you can count on them to perform well, even in economic downturns. This is because tissue papers will always be part of the budget even when the consumers have tightened their belts.
It does not matter even in times of crisis when consumers tend to pile the commodity in large quantities. The demand and supply always get back to normalcy, as we witnessed with the coronavirus pandemic.
From our detailed discussion on toilet paper stocks, we can conclude that this is a vital product. This means that its demand is unlikely to cease. Therefore, investing in the stocks would ensure that you have a slow and steady portfolio growth.
We have provided you with a list of the top companies above. So, if you go for any of them, there is little chance of losing your money.
Finally, ensure that you follow the correct procedure in purchasing the shares to avoid any nasty surprises ahead.