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Given my general tendency to approach everything from a longer-term macro fundamental view, I decided to write an article each month covering a stock which I see as having potential for a long-term buy and hold, based not so much on recent quarterly results, but rather on the long-term prospects of the business model and its products. For these articles, I will pick companies keeping in mind the potential outlook for many years or even decades. I also want to clarify the fact that I am looking at the overall long-term macroeconomic picture from a slightly more pessimistic than average point of view, therefore I am looking at investments with potential to withstand tough times and even thrive in the face of adversity. For this month, I chose Kimberly-Clark (NYSE:KMB), because I believe it makes products that once it manages to get the consumer hooked on, they will continue to purchase even when things get rough. Many of the products have long-term fundamental support for robust growth, so there seems to be very little risk and much potential for gain.

Company & Products:

Kimberly-Clark specializes in paper products such as Kleenex and Depend (adult diapers). Kimberly-Clark also has as part of its portfolio, the Huggies brand, Kotex feminine hygiene product line, Cottonelle, Goodnites, Little Swimmers as well as other brands around the world. Most of these products are paper based and the company has business operations in roughly sixty countries. It employs over 58,000 people worldwide.

From a financial perspective, the P/E ratio is at 18. Market Cap is at $40.38 billion. The stock went from hovering at around $75 a share in 2008 to $104.74 now as I am writing this. Net sales in 2012 amounted to $21.06 billion, which is up almost 10% compared to 2008. The fact that both stock price and net sales are up since the 2008 crisis hit is one of the main reasons why I believe this is a very good long-term investment. More financial data on this company including dividends, net income and other information can be accessed from their annual reports.

Long-Term Outlook:

Kimberly-Clark has many products which cater to many different consumer demographics. Some products such as Kleenex cater to all demographics and the brand has enviable cultural standing. I am sure most of us heard someone say "please pass the kleenex" or a variation of this phrase at least a few times in our lives. Such products offer long-term consumer demand stability and will continue to be a great asset.

The brands that make the future prospects of this company the brightest and most exciting in my view are the various diaper lines. I think the adult diaper line has especially strong growth potential.

In the United States, it is estimated that the number of people living with Alzheimer's is set to double or even triple in the next few decades. Demand for adult diaper products will also double or triple as a result of this and other elderly ailments, and the Depend brand is very strong in this category. Aside from that, the company's global reach will be an especially strong asset given that similar demographic trends to what we have in the United States are also present in Europe, Canada, Australia and all other developed countries around the world. Aside from the developed world, we also have countries like China where the country's demographic makeup is starting to resemble that of the developed world and there is a fast-growing middle class which covets the same lifestyle as we enjoy. Disposable diaper products are part of that deal.

I can speak from experience, having been born in Romania where 25 years ago disposable diaper products were completely absent from the market, that the penetration potential of these product lines in developing countries is huge. In Romania, the average GDP per capita is about $9,000, which is just slightly below the global average, yet most new parents make a way and purchase disposable diapers for infants. The growing elderly population has also taken to using disposable diaper products as the need arises. It is a comfort that makes it on top of the list when it comes to consumer expenditures, almost making it to the list of necessities such as food and shelter. Once these products make it in a developing world market, they become among the least likely products that people are willing to do without during hard times.

The future size of the consumer base in the developing world could make disposable diapers a market with potential for exponential growth. If we consider that every year about 70-80 million babies are born and if we are to assume that a few decades from now most parents on this planet will want to make use of disposable diaper products, it becomes clear that the child diaper market alone will be one of perhaps 200 million households, given that most children are potty trained by age three. The UN estimates that by 2050, there will be over a billion people who will be over 65 years of age worldwide. The majority of them will not need to use adult diaper products on a regular basis, but still, the growth in the elderly population coupled with a growing global middle class, which will allow more and more elderly people the luxury of using such products when needed, means that the potential is huge and Kimberly-Clark is well-positioned to take advantage of the trend.

Company Resilience:

As I often pointed out in previous articles, I expect times to be tough for the global economy in the next few decades. Even most establishment organizations such as the IMF, World Bank and major companies project future global economic growth to average in the 3% range for next few decades, which is a full percentage point lower than what we got used to in the 1945-2008 period. I, for one, believe that even the 3% average long-term global growth expectations are slightly overly optimistic; therefore, I want to identify companies which possess long-term resilience in the face of tough economic times ahead when making my monthly long-term picks.

Kimberly-Clark meets the criteria, because the product line is composed of goods that people have very little tolerance when it comes to doing without. I believe that when it comes to diaper products for both infants and adults, households in need of them will give up on many other consumer goods such as electronics, new clothing, most entertainment products and services, new furniture, house improvements, or vacationing. The only goods that have less demand elasticity are essential goods such as basic food, shelter and transport.

This company is not for those who enjoy the excitement of high frequency trading or are looking to find the stocks which will turn a dollar into one hundred dollars in a few months or years. It is a well-positioned company, with ideal products which have growth potential despite a tougher economy than what we have grown used to before 2008. In the absence of some real bad management in the future, this company has very little downside even in very tough economic conditions, and given the current global economic and demographic trends, has lots of potential for upside, thus so does the stock. It is a perfect buy and hold for those who want to do so and not worry about it on a daily basis, but hope to be rewarded for their patience.

Source: Kimberly-Clark: Long-Term Growth Potential And Resilience In Tough Times

Additional disclosure: I currently do not own this stock, but will most likely buy in the near future.