Monday, March 12, 2007

Proctor and Gamble

I recently came across this post on the moneysense forum. It was posted by a savvy amateur investor (investor99). I believe him to be competent and have asked his permission to post his comments.

“I decided to bite on PG today, and leave the U.S. financials for another day.

After PG's dramatic 5% fall and recovery I thought I had missed my opportunity, however the stock fell again to the low $62 level where I got in. I've wanted to own this one for quite some time now, but it was never cheap enough. It's still not cheap but I think the multiple is warranted and I like the technical clue that I got when huge amounts of buying came in at $61.25. Obviously there is major resistance at that price so the risk reward was tilted IMO, to the reward side. One dollar down and a fair amount more than that up. If it falls lower over the next few days or weeks I'm going to double my position.

2007 EPS estimate = +15% YOY
2008 EPS estimate = +14.5% YOY
Not bad growth for a $197 Billion company. Their stated goal is 10% EPS growth annually.

I like the play on the developing world including the BRIC countries, and the stability of earnings due to the fact that many of their products are 'essentials'. Everyone reading this post has probably used a P&G product today. Also the fact that they have raised their dividend at a pretty healthy rate (10%+), every year for the last 50 years doesn't hurt either. 10/16 analysts have it as a buy and S&P has it as a 'Strong Buy'.”

Here are some other stats for P&G.

P/E – 22
Forward P/E - 20
Price/Sales – 2.66
Price/Cashflow – 15.5
Yield – 2%
S&P – 5 star, strong buy
Half of it’s sales are outside of North America

(Disclaimer: I’m not your boss or your spouse so do you own research and make your opinions on when to buy or sell. Nothing I say should be bastardized or construed in any way to be advice)


MG (moneygardener) said...

I concur..


Proctor and gamble is one excellent company.

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