Procter & Gamble ( PG )
PG is down more than %3 today , what do you guys think ? good entry point ?
This company has had very little revenue or earnings growth going on about four or five years. The stock price has barely budged in 5 years. They do pay a decent dividend but this is essentially a zero growth large company right now at a 19 P/E according to Google Finance. Lately they seem to be earning 90 cents per quarter or 3.60 per year and I'd be a buyer at a 15 multiple due to earnings stability which is a stock price of 54.
People are paying up for yield here and I think this company is still overvalued given its history of no growth.
You won't lose a lot of money but I suspect you'll trail the index by a fair margin on this one.
In the same segment of the market there is CHD which trades at a higher multiple but their EPS has increased about 40-50% over the last 3 years. They have a strong history of making wise accretive acquisitions. I'd consider buying this one on a correction to PE of 18.
There is also Unilever which plays around in the same area and has a better history of growth and probably has more progress of penetration into the emerging markets. If you buy it, buy UL the British ADR and not UN the Dutch ADR to avoid withholding taxes. I'd buy this one at an 18 multiple again or $25.
The problem right now is most large caps with decent yields have their share prices bid up too high for companies with minimal growth. It is tough to be an investor searching for yield in these large, stable companies as you have to resign yourself to minimal hopes of capital appreciation.
If you want yield, consider the mortgage REITs from the US or Canadian REITs. There are also several good Canadian restaurant franchises that offer good yields. The Canadian banks are good. P&C insurance is also good.
People are looking to save money and while their brand is strong, their prices on things are higher than the discount alternative.
PG has a high debt (I think) and warren buffet also sold out his shares a few years ago.
I think it's a good time to buy PG... don't remember if it was Buffet or another guru, who said that 3 stocks that you can buy and forget for 100 years are MCD, KO and PG.....
Originally Posted by Jungle
I"d much rather have KO or MCD over PG these days.
Originally Posted by gibor
If you want a bond-like return then go ahead and take PG because they haven't been growing but are consistently profitable and will continue to pay their dividend with a small annual increase. The big problem with them is I haven't seen much growth from them in 5 years and this is reflected in share price, earnings, revenues and book value. The other problem with them is they are so large that it is tough to move the needle - 30 billion dollar brands or something along those lines.
They are pretty safe but not bond-like safe, though. They went from 70 to 45 during the great recession which is a loss of 36% so they can go down.
Yes, "during the great recession " they dropped strongly *as actually all other stocks), but they still were increasing dividends on monthly basis...
I got PG in low $62's at the end of 2011... (I didn't buy KO or MCD as their dividend was less than 3%)
Agree with all statements, however I see MCD and KO as the better choices, they continue to out perform and grow in emerging markets. PG will not be a bad investment, but it may not outperform.
Procter & Gamble Stock is worthy of a better strategy than simply buy and hold
I have been in and out of PG Stock many times over the past 40 years. The company is a behemoth with over 190 billion in assets. But growth is slow and that concerns a lot of investors. The PE is a bit higher than other companies in the same class, but that doesn't mean the stock isn't worthy of a look. Personally I believe a better strategy is to either sell puts to get into the stock at a discount or buy a few shares, sell a covered call and sell puts to average lower into the stock. That way you have the best of all three. You get the dividend today, you may get more shares but at a lower price in the future and if the stock shoots higher you can be exercised out for a profit and start the whole process over again. I have a website that I started a few years ago and I discussed this trade with readers a couple of days ago. I don't know if the forum allows me to put a link to the article but you can find it on my website under the heading Stock Call Or Put. It's a great trade that requires less capital than just buying the stock outright and hoping it all works out and it offers some protection as well as the chance to earn double the dividend with very little work. Just an idea. Teddi Knight
Anybody have any thoughts on the Bill ackman play on pg?What he is doing?is he trying to unlock vaule?He put a big stake down(the stock had a nice move mid week)I own some shares.They want to break up the company into different parts?fire the ceo?any insight?Positive?
Not sure what ackman is going to do. Hopefully he can shake the management team up some and get P&G moving in a better direction. He will need a LOT of money to purchase a large enough stake in the company to assert any significant influence. Perhaps he can team up with Buffet and make more of an impact. P&G represents an important piece of my dividend portfolio....so i hope he can do some good.