While the world is getting increasingly complex, companies that follow and stick to a simple business model can fare well. Especially if they’ve built up a strong brand over the years.
Management who works to ensure that a company’s operations can stay simple will often see great results. And investors who keep their investing simple can also reap the benefits from the compounding power of a simple company not overspending to complicate its operations.
One company working on keeping things simple now is Kimberly-Clark Corporation (KMB). The company manufactures paper products with brands such as Kleenex, Cottonelle, and Scott.
To keep things simple, KMB now plans to condense operations to three divisions. The simpler operational model will also help the company speed up its profit growth.
Currently, Kimberly-Clark is coming off a flat year. But shares look inexpensive at 18 times forward earnings.
Action to take: Kimberly-Clark could be a great stock for long-term investors at current prices. A simpler operation structure could help boost profit margins.
Plus, KMB is a dividend growth stock, with a 3.9% dividend at today’s prices. The company has a history of growing that payout over time.
For traders, shares are likely to keep trending higher in the coming months. The July $135 calls, last trading for about $1.80, could see mid-to-high double-digit returns from a further rally in shares.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.