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Clorox vs COVID-19

With all the craziness surrounding the pandemic it is quite normal for people to look for any means of defense from an unknown and very deadly virus. Household disinfectants (many based on Chrol and its derivatives) have been the long time favorites in this area, as it is chemically extremely potent and destroys viruses and bacteria (and many other things if one is not careful), so we decided to take a look at performance of the Clorox stock and a few ETFs that hold it vs the market in general (S&P500, dashed line in the below chart).

AlphaBot

And wow, it appears that Clorox is winning against the virus not just on chemical level, but on financial too! The stock has been rising steadily most of the time this year, spiking in late March when short term panic and hoarding of disinfectants (and toilet paper) happened. Then it returned to its normal level and then steadily began rising again.

Clorox’s Superman-like resilience to the financial turmoil is quite impressive (and, btw, what would be the kryptonite equivalent for Clorox, I wonder?). However, the ETFs holding staples did not really get much of a boost from their positions (close to 3.5% per ETF.com) and are rolling in the S&P ballpark, plus or minus. 

Also, it is interesting that President Trump’s sarcastic comment on injecting Lysol did not make much of an impact on the stock (in our chart the returns are plotted through April 24), although it definitely made a lot of noise. Honestly, I am not quite sure what is more dangerous - such a comment from the President, or population that can take it seriously. Honestly, people, does COVID-19 also impair common sense? It seems like it does because we have seen reports that calls to the Poison Control Centers have increased after the comment as some people apparently did try this novel remedy. Geez...

FYI, here are the stats for the instruments considered above. 

AlphaBot

The important question for investors now is whether the Clorox Superman will eventually encounter its kryptonite as the world starts opening up again and people realize they have enough cleaners stockpiled for years to come. What do you think? Let me know; I will be happy to discuss!

Dmitri Alexeev is Founder and CEO of AlphaBot, a collaborative platform for alternative investment research.


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