CLX is a buy; headwinds from software transition are over, Gojo acquisition adds synergies, and >6% dividend yield offers value.

Okay, let's move directly to the second scary arrow. Oh, if you thought the Alexandria chart was bloody, wait until you see what happened to this once-loved classic consumer stock.

It's Clorox, trading symbol CLX, a dividend monster I was collecting after a massive price crash.

When most people think of Clorox, they immediately think of that iconic white and blue bottle of bleach or powder that probably sits in your bathroom cabinet, cleaning cupboard, or wherever you keep that sort of thing, maybe the laundry room.

But this company is much bigger than that. We are talking here about an empire of household brands, which includes, for example, Pine-Sol, Liquid Plumper, Glade trash bags, FreshStep cat litter, Hidden Valley Ranch, Brita water filters, the very well-known Bert's Bees brand, Kingsford charcoal, and many more.

I mean, these are brands that ordinary people and even companies constantly stock up on without almost giving them a second thought.

In fact, about 80% of their total revenue comes from brands that rank first or second in their respective categories. This is huge, enormous. When you have this kind of dominance over shelf space, you also have a huge competitive trench that consistently generates huge profits in terms of revenue and net income.

However, despite owning some of the most trusted and profitable brands on the planet, the stock chart looks like a Halloween night nightmare. In fact, Clorox is currently experiencing the biggest collapse I have ever seen for this stock.

The stock has now lost about 70% of its total value since reaching its peak. This essentially erases all the gains made over more than a decade. It's kind of crazy.

So, what else makes investors so terrified of this name? Well, like Alexandria, Clorox was also dealing with the effects of a severe pandemic, where high demand suddenly returned to normal while historic inflation sent manufacturing, transportation and raw material costs such as resin and oil skyrocketing.

Then, in the midst of its attempt to recover from that, the company was also subjected to a massive cyberattack. This happened in late 2023. It temporarily disrupted their ordering system and destroyed the momentum of their operations.

And now, on top of that, they were in the middle of a five-year, $580 million overhaul of the entire enterprise software system, a transition that effectively forced retailers to stockpile inventory and then have to drastically reduce it, creating an artificial drop in shipments that severely damaged their profits last year.

So, when you combine a temporary drop in sales, shrinking margins, and even the current consumer environment in which—let's be honest—we see people really starting to tighten their budgets or wallets, paying more attention to every dollar they spend now.

Well, because of all this, and because the overall conditions aren't great, Wall Street really decided to give up on this stock.

However, for someone like me who has never invested in this stock before, I now see a good buying opportunity when the price is low. First, the massive software overhaul is finally complete, and the heavy spending is behind them.

As they get through those inventory disruptions, I believe those headwinds will actually turn into supportive winds for their sales and profit growth, which we can see directly in analysts' forecasts for the coming years.

Equally important, the new acquisition of Gojo Industries, the maker of Purell, means that Clorox will now cement its position as the undisputed leader in the global commercial sterilization and hygiene industry, with many synergies to be leveraged, as all these products and brands can be sold together very successfully, and they already have the necessary distribution channels and relationships.

I think the synergies will be enormous. In fact, management now expects double-digit growth in both sales and profits next year as a result of this acquisition. Even without this acquisition, the company would have experienced modest growth as well.

So, even from a basic business perspective, the company had already begun to recover.

Because of the price collapse, I can now buy shares at a discount to the sector level, and the dividend yield has risen to levels I have never seen before in this company. It is currently above 6%, which is even higher than it was during the Great Recession, and best of all, it has been growing for almost five consecutive decades.

This means that Clorox is on the verge of becoming a "dividend king" very soon, once it reaches the five-decade mark, which it will achieve soon assuming it continues to grow.

Now, speaking of risks, there are risks associated with this, as the new acquisition has resulted in additional debt to finance the deal, which may raise some concerns about dividend payouts.

But personally, I don't think so. I am more concerned about the current volatile state of the economy. Any significant decline at the overall level could naturally lead to consumers turning to cheaper alternative products.

But for me, I think the risks at these very low levels have already been factored in.

I believe the risk I'm taking with this company is worthwhile, and if Clorox manages to recover a little in the long run, I will have already secured a huge dividend payout, something investors would have been happy to receive only half of in previous years.

So, take it as you wish, but for me, I think it’s worth buying in small quantities and monitoring the results.