Seeking Alpha
Long only, newsletter provider, portfolio strategy, research analyst
Profile| Send Message|
( followers)

Procter & Gamble (NYSE:PG) is a popular stock that has one of the highest earnings predictability rankings and also one of the highest stock price stability rankings. Although the stock is down 6.79% from its one-year high, I think that compares favorably to the Value Line Index which is down 13.93% from its one year high. Just look at the price return over the last 15 years on this graph provided by Barchart:

Click to enlarge

Procter & Gamble provides consumer packaged goods in the United States and internationally. The company offers beauty products, such as cosmetics, female antiperspirant and deodorant, female personal cleansing, female shave care, hair care, hair color, hair styling, pharmacy channel, prestige products, salon professional, and skin care products under the Head & Shoulders, Olay, Pantene, and Wella brands, and grooming products, including electronic hair removal devices, home small appliances, male blades and razors, and male personal care products under the Braun, Fusion, Gillette, and Mach3 brands.

It also provides healthcare products comprising feminine care, gastrointestinal, incontinence, rapid diagnostics, respiratory, toothbrush, toothpaste, water filtration, and other oral care products under the Always, Crest and Oral-B brands; snacks and pet care products under the Iams and Pringles brands; fabric care and home care products consisting of laundry additives, air care, batteries, dish care, fabric enhancers, laundry detergents, and surface care products under the Ace, Ariel, Dawn, Downy, Duracell, Gain, Tide, and Febreze brands; and baby care and family care products, such as baby wipes, diapers, paper towels, tissues and toilet paper products under Bounty, Charmin, and Pampers brands. The company sells its products in approximately 180 countries through retail operations, including mass merchandisers, grocery stores, membership club stores, drug stores, department stores, salons, and high-frequency stores. The Procter & Gamble Company was founded in 1837 and is based in Cincinnati, Ohio.

Factors To Consider

Barchart technical indicators:

  • Barchart uses technical indicators of price momentum from 7 days to 6 months to evaluate the price trend momentum
  • At the present time Barchart shows a 24% technical sell signal
  • Trend Spotter technical hold signal
  • The stock is trading below its 20, 50 and 100 day moving average
  • Although down 4.80% for the month and 6.79% from its one year high that's much better than the market which is down 13.93% from its one year high
  • Relative Strength Index is 44.19%
  • Barchart computes a technical support level at 62.77
  • Recently traded at 63.00 with a 50 day moving average of 63.50

Fundamental factors:

  • Wall Street brokerage analysts predict sales will increase by 5.00% this year and another 3.90% next year
  • Earnings are estimated to increase faster than sales by analysts with an increase of 6.10% this year, an additional 9.30% next year and an annual increase of 8.77% over the next 5 years
  • These consensus numbers result in 9 strong buy, 9 buy, 5 hold an only 1 under perform recommendation from the brokerage firms
  • The P/E ratio of 15.96 is not much higher than the 14.00% P/E of the market
  • The 3.32% dividend is less than 50% of estimated earnings and is higher than the market's dividend rate of 2.3 %
  • This is a worldwide company and it markets and distributes it's products in over 180 countries around the world
  • The company enjoys an A++ financial rating
  • I think these numbers are very reliable because the stock has an almost 100% earnings predictability rank with analysts

General investor interest:

  • This is in the top 25 stocks on Motley Fool as measured on how many readers share an opinion on it
  • The 7,445 readers who voted thought the stock would beat the market with a 97% approval vote
  • The more experienced All Stars voted 99% for the same result
  • Fool noted that the 33 Wall Street columnists who wrote articles about the company were all positive
  • If you need names among those who wrote positively about PG were Tobin Smith, Jim Cramer, Bob Olstein, Pat Dorsey and Chris Davis

Competitors:

I like to look at the price action of a stock and its competitors over the last year and PG is down 3% for the year while Johnson & Johnson (NYSE:JNJ) is down 1% and Kimberly-Clark (NYSE:KMB) is up 11%:

Click to enlarge

Summary: The Personal Products sector had a decent year and I think any of the big three would be a nice addition to your portfolio. Those buying Procter & Gamble (PG) at this price should see an annual total return in the 14% - 16% range over the next five-year period which include a nice 3.32% dividend.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Procter & Gamble A Long-Term Buy