July 29, 2022, Owens Corning (NYSE: OC) and Kimberly-Clark (NYSE: KMB)

With a recession a mere formality, these two dividend kings look like the best stocks to buy now.

Thursday’s (July 28, 2022) GDP reading revealed that the U.S. GDP contracted by -0.9% in Q2 2022. That marks the second consecutive quarterly GDP contraction, meaning a technical recession. Yet something weird happened. The market almost saw it coming, and all three major indices gained over 1%. Yet despite things possibly seeming ok in the markets, they’re still gravely unpredictable. That’s precisely why dividend kings like Owens Corning (NYSE: OC) and Kimberly-Clark (NYSE: KMB) look like the best stocks to buy now.

Owens Corning may be precariously positioned right now. The housing market is slowing; it manufactures and markets insulation, roofing, and fiberglass. Yet it is one of the best stocks to buy now because it offers outstanding dividend growth with deep value. Despite the stock’s surge since late June, it trades with trailing and forward P/E ratios under 8x, provides a consistently growing dividend, and has an over 42% upside based on a recent UBS price target.

Then there’s consumer staples juggernaut Kimberly-Clark, another of the best stocks to buy now. First and foremost, it pays some of the best dividends in its sector. Responsible for some of the best-known personal care and consumer tissue brands, it also just reported record quarterly revenue and stable guidance. Better, it has double-digit projected earnings growth and a triple-digit ROE. While its analyst upside is nothing to get overly excited about, a UBS price target hike on Wednesday (July 27, 2022) tells a different story.

We may or may not be in a recession. So play it safe and chase these dividends. OC and KMB’s dividends are enough of a reason they’re the best stocks to buy now. However, that only scratches the surface.

Owens Corning (NYSE: OC)

Deep value dividend growth is why UBS sees a 42.21% upside.

For nearly a century, Owens Corning has been a prominent player in the building products industry. It’s globally famous for manufacturing and marketing insulation, roofing, and fiberglass composite materials. Despite near-term concerns for the housing market and rising rates, it has proven to be a resilient stock in the face of crisis.

OC’s stock has had an up and down 2022 but has appeared to catch fire since touching its 2022 low of $72.65 back in June.


Although this is one heck of a run, and the stock is nearing overbought territory after a Thursday (July 28, 2022) 6.50% surge, the stock remains deeply undervalued with immense upside.

Strong Growth Despite a Slowing Housing Market

Despite a softening housing market, Owens Corning reported outstanding Q2 earnings on Wednesday (July 27, 2022).

EPS, first of all, came in at $3.83 and easily topped analysts’ expectations of $3.31 by $0.52.

Revenue also came in at $2.6 billion, slightly beating estimates and marking a 16.2% year-over-year increase. Its composites segment grew by 23%, while its insulation and roofing segments grew by 16% and 11%, respectively.

While the Company did not provide specific full-year guidance, its EBITDA margins significantly improved in the quarter. With revenue expected to see an 8.4% 5-year CAGR and net income expected to grow 22.2%, the outlook for Q3 is undoubtedly bullish.

Deep Value Plus Dividend Growth

Deep value plus dividend growth makes Owens Corning one of the best stocks to buy now. First and foremost, despite the stock’s recent momentum, its trailing and forward P/E ratios remain under 8x. Its trailing P/E sits at 7.6x, while its forward P/E is a dirt cheap 6.8x.

Moreover, many other multiples indicate a severely undervalued stock, such as its

  • 27 PEG
  • 9x price-to-book
  • 9x trailing price-to-sales
  • 8x forward price-to-sales


Plus, despite the stock’s recent momentum, it remains -10.26% below its highs.

The deep value story, however, becomes even more enticing when you dig deeper through Owens Corning’s dividend aristocracy. Bottom line, if you love dividends that consistently grow, you’ll fall in love with Owens Corning as one of the best stocks to buy now.

Owens Corning has a solid 1.69% dividend yield. But, its growth track record and enormous growth potential make this dividend truly attractive. Owens Corning has hiked its dividend for 7 straight years, including a massive 35% hike earlier this year, while other cyclical stocks slashed or paused their dividend increases.

Moreover, with a minimal 13.23% payout ratio projected to fall to 12.81% next year, some even bigger dividend hikes could be coming soon. After all, Finbox sees its dividend growing by an outstanding 34.6% at a 5-year 11.8% CAGR.

Strong Margins Add to Owens Corning’s Top Buy Potential

The above reasons are all strong enough justifications for Owens Corning being one of the best stocks to buy now. But its margins add even more to its case and depict a profitable company that runs efficiently.

These include its


  • 1% ROA
  • 6% unlevered ROA
  • 2% ROCE
  • 1% gross margin
  • 2% operating margin
  • 2% free cash flow yield


It probably shouldn’t be a surprise that Owens Corning scored a near-perfect 8 out of 9 Piotroski Score, indicating healthy Liquid Balance Sheets, Profitability, and Operating Efficiency.

UBS Sees Over 42% of Upside for Owens Corning

There remains considerable upside for Owens Corning. Tipranks notes that in the last 3 months, 12 Wall Street analysts offered 12-month Owens Corning price targets. Its high price target currently sits at $135.00, compared to a low of $77.00 and an average of $99.58. OC’s average price target represents a 10.63% upside from July 28, 2022’s $90.01 close.

However, based on a UBS price target increase yesterday (July 28, 2022), its average target is overly conservative and possibly irrelevant by this point. UBS Group kept a BUY rating and tacked on a near street-high $128.00 price target.

Do the math. This represents a 42.21% upside from $90.01, nearly 4x more than OC’s average upside.

OC’s year-to-date low and high are $72.65 and $100.30, respectively.

Kimberly-Clark (NYSE: KMB)

Industry-leading dividends, double-digit earnings growth potential, and a recent UBS price target increase all point to this consumer giant as a top buy.

Anytime you blow your nose, change a diaper, or clean a mess, you likely have Kimberly-Clark to thank. This consumer products giant is responsible for brands like Huggies, Pull-Ups, Kleenex, Scott, Cottonelle, Kotex, and many more.

While Consumer Staples isn’t always the most exciting sector, it’s one of the most stable and predictable, especially during economic turmoil. However, Kimberly-Clark is one of the industry’s most consistent and resilient stocks, making it far and away one of the best stocks to buy now. It has healthy cash flow and solid fundamentals and pays one of the highest dividends in the entire sector.

Plus, while inflation continues to pressure almost every industry, KMB has proven to be a viable hedge with strategic moves, record revenues, and growth potential.

Outstanding Earnings Growth Potential, Record Revenue, and Improved Guidance

Kimberly-Clark reported earnings for Q2 2022 on Tuesday (July 26, 2022). While its EPS of ​​$1.34 impressively beat consensus estimates by $0.06, its earnings growth potential makes it one of the best stocks to buy now. With earnings expected to grow a whopping 17.16% in the coming year, and net income by 6.2%, just wait and see what Q3 brings for Kimberly-Clark in October.

Q2 revenue also turned heads and came in at $5.06 billion, a company record. This also beat analysts’ expectations of $4.99 billion and marked a 7.2% year-over-year increase.

Following this impressive top-line beat, Kimberly-Clark Corp also raised its full-year revenue guidance, mainly due to inflationary price hikes. KMB now expects organic sales to rise as much as 7%, compared to the previous 6% forecast.

KMB’s Dividend and Triple-Digit ROCE are its Strongest Selling Points

When talking about why Kimberly-Clark is one of the best stocks to buy now, the dividend is a major reason. It has an outstanding dividend yield of 3.5%, which compares very favorably to many competitors in the consumer staples sector.


(Image Source: Finbox)

Most importantly, Kimberly-Clark is purebred dividend royalty as it’s increased its dividend for 51 straight years and counting. With next year’s payout ratio projected to be under 75%, forecasts show its dividend could grow another 1.8% at a 4.4% 5-year CAGR.

Besides the dividend, what also sticks out fundamentally is KMB’s mind-blowing 319.8%  ROCE. This means that KMB’s management is more than effectively and efficiently utilizing the capital invested by shareholders. To generate a 300+% return from the book value of its equity is mind-blowing. Look at how KMB’s ROCE dwarfs that of its major competitors.


(Image Source: Finbox)

It doesn’t start and end with the ROCE, though. Kimberly-Clark has plenty of other strong-looking margins, which clearly explain why it’s one of the best stocks to buy now.


  • 1% ROA
  • 4% unlevered ROA
  • 2% gross margin
  • 8% operating margin
  • 0% free cash flow yield

On the Surface, Kimberly-Clark May Have Peaked…But Others See More Room to Run

TipRanks notes that 6 Wall Street analysts offering 12-month price targets for Kimberly Clark in the last 3-months. Based on these targets, it has a relatively underwhelming average upside of just 0.80% from July 29, 2022’s $133.26 closing price. That considers a high price target of $153.00, a low of $119.00, and an average of $134.33.

However, UBS on Wednesday (June 27, 2022) gave the stock a $142.00 price target, representing a 5.71% upside.

While there are stocks with considerably more upside, that’s not why you buy a stock like Kimberly-Clark in an environment like this. It’s not a growth stock to chase gains. It’s a safety play with fundamentals, dividends, and resilience too strong to ignore.

KMB’s year-to-date low and high are $116.28 and $143.25, respectively.