Two Giants Trading for Decade-Low Valuations
It's clear investors today are clamoring for growth above all else...
Consider cloud-based graphic-design company Figma (FIG), which went public on July 31.
Originally priced at $33 a share, the stock closed its first day of trading at $115.50 – a jaw-dropping 250% jump. It has come back down to Earth since then, closing about $69 a share last night. But that's still more than double the IPO price.
Investors want a piece of Figma after its revenues soared from less than $100 million in 2021 to $749 million in 2024. In the company's most recent quarter, sales were 46% higher than a year ago.
Thanks to these dramatic results, Figma became the largest venture-backed tech IPO since 2021.
Elsewhere, we've seen investors fall in love with Palantir Technologies (PLTR), a data-analytics software company. Palantir has grown sales by 48% over the past 12 months... and as a result, the stock is up a staggering 440%.
It's now trading for more than 100 times sales. But investors don't mind paying excessive valuations if the growth story is all about AI.
Simply put, the market is ignoring companies that can't grow by double digits. And it doesn't seem interested in the safety of consistent dividend payments, either. Because of this, one particular sector has been left in the dust: consumer staples.
Consumer-staples companies like Procter & Gamble (PG), Coca-Cola (KO), and Colgate-Palmolive (CL) sell everyday essentials, and they make steady, reliable profits. You buy their products no matter what is happening with the economy... things like laundry detergent, soda, toothpaste, and diapers.
Consumer staples are valuable in times of volatility because their businesses are so sturdy.
But today, tech is blissfully going straight up... and consumer staples have been more or less flat. You can see it in the chart below, which compares gains for the tech-heavy Nasdaq Composite Index with consumer staples...
While I (Jeff Havenstein) am not bearish – even with the market near all-time-high valuations – I do see the benefit of diversifying with consumer staples.
In fact, there are many stocks in this sector that trade for low valuations and pay high dividends.
Take Clorox (CLX), for instance.
When you buy cleaning supplies or laundry detergent, there's a good chance you're buying a Clorox product. Across its entire product portfolio, more than 80% of Clorox's sales come from brands that are either No. 1 or No. 2 in their respective markets. In addition to Clorox disinfecting wipes and bleach, its market-dominating brands include Brita water filters, Burt's Bees personal-care products, and Kingsford charcoal.
Since July 1980, shares of Clorox have returned 14% a year. And the stock has a dividend yield north of 4% today.
Still, the stock trades for a mere 15 times earnings, while the S&P 500 Index trades for 27 times earnings. On top of that, Clorox is now trading for a 10-year-low valuation. Take a look...
Another low-valuation, high-dividend consumer staple is General Mills (GIS).
It's most known for its iconic cereal brands (such as Cheerios, Cinnamon Toast Crunch, and Lucky Charms) and snack brands (such as Chex Mix and Nature Valley). But General Mills is also a big player in the pet-food space after it acquired premium-pet-food company Blue Buffalo in 2018.
Many investors thought the $8 billion purchase was a terrible deal.
Instead... the acquisition of Blue Buffalo has been a roaring success. Pet products have been General Mills' fastest-growing segment for several years.
General Mills hasn't returned as much as Clorox since 1980. But it has still posted an 11.8% annual return. And we're seeing the dividend yield reach nearly 5% today.
As you can see below, General Mills trades for just 11.8 times earnings, right around a decade low...
While there are company-specific reasons why Clorox and General Mills are so cheap, these are brands that have withstood the test of time. They're resilient during periods of economic turbulence, and their products are part of folks' everyday lives.
Right now, the market isn't interested in consumer staples, as most aren't growing significantly. But there's always a place for cheap, sturdy, and high-yielding stocks in diversified portfolios.
Consider adding some consumer-staples stocks if you think your portfolio is too heavily tilted toward tech.
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Here's to our health, wealth, and a great retirement,
Jeff Havenstein
August 20, 2025