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I have been scanning the FTSE 250 of the top stocks that look set to excite the market in 2025 and one just jumped out at me.
This is weird because it’s one that’s completely flown under my radar for years, and for good reason. This company has found the right lather for itself.
When I saw the name PZ Cussons (LSE: PZC.L), I just saw a bar of Imperial Leather soap. It used to be ubiquitous in people’s bathrooms, although I don’t recall seeing it very often recently.
Can the share price shine again?
The consumer goods group has other brands, especially Original source, Carex hand gels and St Tropez a range of self-tanning products. It’s a great collection but let’s put it this way: it’s not Unilever. On the other hand, this may work to its advantage. There is more scope to raise a £375m company, which is PZ Cussons’ current market cap, than one worth £113bn.
So what went wrong? PZ Cussons operates in a competitive market, dominated by the big guns Unilever and Proctor & Gamblewhile your brand’s competitors and discounters squeeze margins and market share.
It also ended up being overexposed to the Nigerian market, which accounts for about 40% of total sales. The 10.6% drop in full year revenue to £527.9m was mainly due to the depreciation of the Nigerian naira.
PZ Cussons’ share price has found a sudden boost after rising 14.1% on the month, driven by a positive market review on 21 November. It is down 39.68% from last year. In two years it decreased by 58.62%.
The board now forecasts first-half like-for-like revenue growth of 5%, despite price declines in Asia-Pacific and elsewhere. “soft phase” Australia and New Zealand. It plans to sell part or all of its African business. That’s a big step. It has been operating in this continent for 140 years.
It’s a long-term restructuring process
PZ Cussons is also developing with St Tropez sale, which is considered a non-essential brand. Popular in the US, it can raise anything up to £100m. The cash will come in handy. The company ended in 2023 with a £250m debt pile. Worked up to £160m. Marketing can be a game changer.
The five analysts that track the stock have set an average one-year price target on the share of 105.4p. That’s up 17.83% from today, if that happens. Three called it a Strong Buy, while two called it a Hold. No one is suggesting to sell, and why should they, with PZ Cussons shares finally showing signs of life.
My concern has been in the process of restructuring for years, with the board divesting everything from its Nigerian dairy products to Australian yogurt and Polish soaps. When will it end?
There is still a buying opportunity here, with PZ Cussons trading at 11.15 times earnings, while it yields 4.03%. Original source Bath product sales are booming in the UK Children Farm shopping makes hay.
I’m tempted, but not tempted enough to buy it. The board still has a lot of work to do here. I might be kicking myself this time next year as PZ Cussons might just clean up in 2025.
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