Buy Kimberly-Clark on Near-Term Weakness

Kimberly-Clark is expected to buy back between $700 million to $800 million of its shares in the next two quarters. It stock is a no-brainer.
By Richard Saintvilus ,

Consumer products company Kimberly-Clark (KMB) - Get Report should be on the radar of investors who are looking for a solid large-cap dividend payer that is actively buying its own stock.

The slight pullback in its shares price Monday looks like a solid buying opportunity.

Kimberly Clark didn't report a breathtaking second quarter on Monday, but it was far from a disaster. And the 1.5% decline in its stock price was more of a function of "sell the news" rather than beating up the company, which nonetheless beat estimates on both the top and bottom lines.

Even with the 1% decline in second-quarter revenue, Kimberly Clark is still making money, as evidenced by the 50 basis-point rise in gross margin.

Technically, Kimberly-Clark's chart remains strong.

Kimberly-Clark shares closed Monday at $132.59, down 1.52%. The stock has risen about 4% year to date, underperforming the 6% rise in the S&P 500 (SPX) and the 10% rise in the Consumer Staples Select Sector ETF (XLP) - Get Report .

Over the past 12 months, Kimberly-Clark shares have risen almost 20%. Despite the slight underperformance year to date, the shares are only 4.5% away from their all-time high of $138.87, reached on July 5. You can see from the chart that the stock had shot up about 12% from around $124 to its all-time high.

Kimberly-Clark stock was setting up for a pullback, which has dropped the shares below the 20-day average of $135.07 (the blue line). Though the stock now at around both the 50-day and 100-day, the chart shows there's limited downside risk, as support is firmly at the $130.25 line, or just 1.76% lower.

Add in the fact that the company expects to buy between $700 million to $800 million of its shares in the next two quarters, and buying Kimberly-Clark stock now looks like a no-brainer.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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