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Three analysts and top management from three sector firms examine the Cosmetics, Personal Care & Household Products sector in this special 45-page issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info427.htm

TWST: Moving on to Colgate (NYSE:CL), which you’ve described as the leader in oral care. Is most of their revenue derived from oral care these days?

Mr. Steele: Yes. However, to be clear, I have a market-performer rating on Colgate. In my view, though, ratings are probably one of the least important things that I do versus just communicating companies’ strategies and their ability to execute them. So with that said, yes, oral care is still their leading category. They are, again, globally dominant in oral care. Oral care is probably the third growth industry in my group — the other two, of course, being hair care and skin care. And the common denominator between hair care, skin care and oral care is that they all have visual impact on the consumer. So here’s Colgate, dominant in oral care with not a whole lot of competition right now. They’re very focused on new product development, very focused on cash-flow generation. You have to like the company’s chances in achieving consistent double-digit earnings growth.

TWST: Intuitively, one would expect that oral care would be very successful in developing markets as one of the first areas that people would be interested in once their discretionary income increases. Has that been important for Colgate?

Mr. Steele: Absolutely. Two-thirds of its business is derived internationally, so it is an international company. Colgate has done a tremendous job of educating people as to the importance of oral care. I think, even in this country, five years ago people didn’t talk about the effect of oral care on their gums, and now gum care has become of paramount importance. I think we’re all learning better oral care as we go along, and that’s to Colgate’s advantage.

TWST: Is there a new product in the pipeline?

Mr. Steele: There is always a new product in the pipeline at Colgate as they are really a new-product machine — that’s one of the things that keeps their competitive edge. If there is a trend Colgate will be there: we have seen them launch whitening toothpaste; we have seen sensitive toothpaste, two-in-one toothpaste; new types of toothbrushes; higher-end, battery-powered. You name it, they’re there.

TWST: If an investor were to buy Colgate today, what kind of time horizon should he or she have?

Mr. Steele: I think that investors should seriously consider constructing a diversified portfolio of very solid names, and as part of those names you’ll want some to be defensive and predictable. And over the next two years I definitely think that you could do a lot worse than investing in Colgate.

TWST: One last question: what’s your take on investor sentiment surrounding the group today?

Mr. Steele: I think investor sentiment is generally cautiously optimistic on my group. I think the buyside is 100% behind the focus that these companies are now having on their cash flows and balance sheets. I think the buyside knows that these companies are defensive, but they need to get more consistent, they need to be more fiscally prudent. The sentiment is cautious in that these companies are doing some of the right things. But on the other hand, there’s a certain level of frustration at the inconsistency that this group has demonstrated over the last four or five years.

This special issue includes:

1) Cosmetics, Personal Care & Household Products - In an in-depth (4,700 words) Analyst Interview, William H. Steele, Managing Director at Banc of America Securities, examines the outlook for the sector and shares specific stock recommendations.

2) Personal Care & Household Products Stocks - In an in-depth (4,200 words) Analyst Interview, James A. Gingrich, Senior Research Analyst at Sanford C. Bernstein & Company, Inc., examines the outlook for the sector and shares specific stock recommendations.

3) Household Products & Personal Care - In an in-depth (4,300 words) Analyst Interview, Linda Bolton Weiser, Vice President of Equity Research at Fahnestock & Company, examines the outlook for the sector and shares specific stock recommendations.

4) The TWST confidential Off-The-Record survey of management performance at eight sector firms asked market insiders about the ability of management teams to create shareholder value.

5) CEO and Sponsored interviews (average 2,500 words). Top management of three sector firms examine the outlook for their firm and the sector.