It goes without saying that a company that makes bleach and other household products probably won't excite the majority of investors. A business model that is often derided as too boring among the financial media surely can't deliver strong returns, right? After all, how much money can Clorox possibly make from cleaning products, water filters, and charcoal? Surely, the only stocks worth investing in these days are in social media or one of the other sexy ideas currently occupying media headlines...

Those who dismiss consumer staples stocks like Clorox, Procter & Gamble , or Kimberly-Clark would be surprised to know just how rewarding a boring business model can be, and that's exactly what makes the future so promising.

Foresight is 20/20
Clorox has unveiled its strategic growth plans in an initiative called The 2020 Strategy, in which the company outlined its long-term vision. Clorox has a long and proud history, and its outlook on the future has allowed it to navigate the many peaks and valleys of the American economy over the past decades. Clorox Chairman and CEO Don Knauss was quick to point to Clorox's outperformance, despite its notoriety as a boring consumer goods company.


Clorox made good on its past strategic priorities, and the results speak for themselves. Over the past five fiscal years, Clorox has delivered a total stockholder return of 88%, compared to 40% for the S&P 500. Clorox's easy-to-understand business model and focus on top brands allowed it to raise its dividend from $1.60 per share to $2.56 per share over the last five years, representing a 60% increase in that time.

Going forward, Clorox's long-term financial goals are as follows: Producing 3% to 5% annual sales growth, 25 to 50 basis point annual improvement in its earnings before interest and taxes (EBIT) margin, and realizing at least 10% free cash flow margin every year. As you can see, there's nothing earth-shattering about these goals. At the same time, that's exactly why you should be excited about the company's future. Clorox is simply going to do exactly what it has always done, which has allowed it to produce such outstanding returns over the past several decades of its existence.

Strong brands allow for remarkable consistency
Clorox has built a portfolio of market-leading brands, which will allow for a future as prosperous as its past. Its core brands include its namesake bleach as well as Pine-Sol, Kingsford, Glad, and Hidden Valley. In all, nearly 90% of Clorox brands hold the number one or number two market share positions in their respective categories.

Of course, strong brands are key for any consumer goods company. Procter and Gamble has a stable of impressive brands. P&G takes great pride in its 50 Leadership Brands, which account for more than 90% of the company's total sales and profits. Exactly 25 of these 50 Leadership Brands bring in at least $1 billion in annual sales. In all, P&G's list of premier products generated more than $84 billion in sales last year.

Ditto for Kimberly-Clark, the company behind a host of hugely profitable product lines. Kimberly-Clark has its own list of billion-dollar brands. Its Kotex and Kleenex brands each bring in at least $1 billion annually. The company's Scott product line generates global sales of more than $2 billion each year. Doing even better for Kimberly-Clark is its Huggies brand, the main driver behind the company's $6 billion Baby Care segment. In all, Kimberly-Clark holds five brands that each bring $1 billion annually into the company's coffers.

That's what makes Clorox management, and me as well, so confident that it can fully realize The 2020 Strategy. Its goals are very much the same as they've been since the company's inception: to focus on the highest-value opportunities to deliver sustainable growth. This is why I'm excited about the road ahead for Clorox, and for P&G and Kimberly-Clark as well, and why you should be excited too.

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The article Why You Should Be Excited About Clorox's Future originally appeared on Fool.com.

Bob Ciura has no position in any stocks mentioned. The Motley Fool recommends Kimberly-Clark and Procter & Gamble. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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