NEW YORK (TheStreet) -- One of the basic fundamentals of investing is the risk/return ratio. The riskier the asset, the higher the potential returns. But, as I wrote in Low Risk, High Returns, research by Russell Investments found the most stable, or least risky, stocks had the highest long-term returns.
Clorox (CLX), Unilever (UN) and Kimberly-Clark (KMB) are three such publicly traded companies, all giants in the consumer sector.
Their products are extremely familiar. For Clorox, there are Glad plastic bags and the eponymous detergent, among many others. Unilever markets items all over the globe, from ramen noodles to Dove soap. The personal care products of Kimberly-Clark such as Kleenex are sold around the world in more than 175 countries.
Based on the return on equity, all do it very well.
According to Warren Buffett biographer Carol Loomis, this is one of his most important indicators. In an interview with the American Association of Individual Investors, she stated that "a company capable of producing a good return on equity and doing it consistently is the kind of company you want to be in. It's just a good marker to see what kind of company it is. A company with a standard balance sheet that can make 20% return on equity is a jewel."Clorox, Unilever and Kimberly-Clark are all jewels in the crown of high returns on equity. Kimberly-Clark has a return on equity of 39.90%. For Unilever, it is 65%. The return on equity for Clorox is well into the triple digits. With such a strong performance, there is no reason for a shareholder to sell.
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