In a world of trade wars, stock market sell-offs and inverted yield curves (even negative yields), investors also have to deal with a slowdown in earnings and economic numbers. And the investing community is having to hear the word “recession” as frequently as the media can find a way to use it. It should be pretty easy to understand why so many investors want to be cautious and defensive.

Colgate-Palmolive Co. (NYSE: CL) is a highly defensive stock, despite being in the crowded and competitive field of consumer products. People buy toiletries and basic household goods next in line after food and water.

Independent research firm Argus has reiterated its Buy rating on Colgate, along with an $82 price target. That’s a 10.6% upside target from the prior close of $74.15, but it is ahead of adding in its 2.3% dividend yield for total return investors. To prove that Colgate is truly very defensive, note that it rose 16 cents to $74.31 a share on Tuesday when the Dow Jones industrials fell 285 points (−1.1%) and the S&P 500 fell 20 points (−0.7%).

Before getting into the Argus Buy rating and $82 target, 24/7 Wall St. wanted to look closely at what else has been said about this stock by other firms ahead of and after earnings. Argus raised its target price to $82 from $72 with a reiterated Buy rating back on June 11. This stock may have been at $74.15 ahead of this last target price upgrade by Argus, but it had been down at $72.61 ahead of the June 11 call. That’s not exactly getting rich, but this is supposed to be a slow-moving defensive stock. Here are some of the other price target hikes that have occurred after the Argus call in June:

• Wells Fargo, to $68 from $65  on June 18 and then to $70 from $68 on July 29
• Deutsche Bank, to $76 from $74 on July 12
• Morgan Stanley, to $72 from $68 on July 15 and then to $74 from $72 on July 29
• UBS, to $82 from $80 on July 29
• Citigroup, to $79 from $77 on August 20

So, many analysts have raised their targets on Colgate. The difference here now is that the consensus analyst target price has risen a few percentage points in the past 90 days, and the pre-Argus call showed a consensus target of $74.31 from Refinitiv, with a street-high being the $82 that is matched by UBS.

One street-wide concern about the Colgate defensive position is that its shares are valued at about 26 times expected 2019 consensus earnings and at about 24.5 times the consensus earnings estimate for 2020. That isn’t cheap, even for a defensive consumer products stock when the broader S&P 500 is valued at closer to 17 times expected earnings.

24/7 Wall St. recently highlighted that the normal defensive stocks to flock to ahead of a recession might already be far too expensive to chase. It turns out that not everyone agrees, and in some of the names there is a belief that substantial profits can still be made.

All these concerns are not exactly a secret. Colgate has been in operation for over 200 years now. The consumer products company has paid a dividend for 124 consecutive years, and it is in the club of companies that have raised their dividend for 50 or more consecutive years. Those are impressive numbers and are well beyond what new dividend-paying companies can claim.

Argus has pointed out many positives. The firm noted that the company’s second-quarter organic sales were up 4%, an acceleration from 3% in the first quarter of 2019 and 2% in the fourth quarter of 2018. Argus also stressed that the company has credit ratings in the “low-AAs” and its dividend is only likely to keep increasing. Argus even warned that its 2019 earnings estimate reflects substantial headwinds from commodity costs and currencies at the same time that substantial increase in advertising spending is expected to deliver long-term benefits. While Argus expects some of the cost pressures to ease in the second half of 2019, consumer staples companies need to drive sales, and Colgate is doing that.

Positives include improvements to the Colgate Total brand, increasing its products with natural ingredients, promoting new pet foods for younger and older pets. While some of the metrics may seem expensive, the Argus report said:

Capital efficiency is another major theme. Colgate-Palmolive has a 36% return on invested capital (by Bloomberg’s calculation) which is well above the peer average of 15% and currently higher than every peer-group company. Perhaps most importantly Colgate-Palmolive’s return on capital is 29 percentage points higher than its cost of capital.

Colgate reaffirmed its guidance that calls for a mid-single-digit decline in earnings per share from last year’s $2.97 are due in part to increased advertising costs. The company also is making selective acquisitions after having announced this summer that it had agreed to buy the Laboratoires Filorga Cosmétiques (Filorga) skincare business for an equity purchase price of about $1.7 billion. Regionally, Colgate may hold up based on its global sales (as of last quarter): North America (22%); Latin America (24%); Europe (15%); Asia Pacific region (17%); Eurasia/Africa (6%) and Hill’s pet food (16%).

In its Asia Pacific region, net sales decreased 4% from the prior year, with a volume decrease of 1.5%, with foreign exchange as a negative of 3.0%, and pricing was up 0.5%. In China, organic sales decreased 1.0% and operating profit fell 14% as the operating margin narrowed 320 basis points to 26.9% due to an increase in general and administrative costs.

Argus maintained its 2019 earnings estimate of $2.90 per share after factoring in a slightly lower share count. Management is said to be expecting an increase in commodity costs, while its productivity improvements should offset commodity and currency pressure. Argus also is maintaining its 2020 estimate of $3.15 per share and is modeling slightly more than 3% sales growth. The firm’s five-year earnings growth rate forecast is still 7%, and the repots still calls for effective innovation to drive sales and to improve efficiency.

Colgate most recently had $863 million in cash and cash equivalents and is generating about $3 billion of cash from operations while EBITDA was above $4 billion in each of the past three years. The report further noted:

Total debt of $6.6 billion looks high at 103% of capital, but that is because the company had a $1 billion charge in 2015 related to Venezuelan operations. This reduced shareholders equity to a negative value and raised debt-to-capital. The company’s interest coverage is a more relevant indicator and that is very strong. Leverage, with total debt at less than 2-times trailing-twelve-month EBITDA in FY18, FY17, and FY16 is similarly supportive of high credit ratings. … The dividend payout ratio has risen from about 37% in 2009 to about 60% of our 2019 adjusted earnings estimate. We think the current level is reasonable for a mature company… The company has a share repurchase program but plans to reduce repurchase activity after the Filorga deal in order to pay down debt more quickly.

Argus did note that Colgate is not without risks. One is a lack of sales growth, and its 2018 total sales were lower than they were in 2010, even if its net income in 2018 was up from 2017 and was higher than in 2010. The company also is dealing with mature markets, and it will need to raise sales of its most innovative products.

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