Procter and gamble is a great company. However its days of growth are over. Yes it may grow earnings by 7-8% sometime in future years if they decide to make huge employee reductions and reduce the bloated salaries of executives but for now its 2-3% growth is nominal at best. Despite this lack of growth P&G is selling at 18.4x this June(2013) earnings and 17x the $4:14 it will do in 2014. This premium valuation is what a double digit earnings growth company should receive not a 100 year old bloated consumer giant with little growth. Yes it has a 3.4% dividend and in my opinion that is the only reason the stock is not selling at $60. The stock is only worth its dividend in this low interest rate environment.....its way overvalued and if rates rise it will be down 15%. Dont buy the hype that it is undervalued..its not.
Well, you could be right but here is my plan. Keep it until I die. It is good for 7% earnings growth for eternity and hasn't missed a dividend for over 120 years and hasn't failed to increase that divy for 56 years. Yea baby, safer than money in the bank with a far better return. Tide is so valuable it is used for currency in illegal drug deals.
I understand and respect your opinion and believe it is a reasonable one. Howeverr, this company has had a very long-term track record of delivering 4% real earnings growth (6-7% nominal) over the long term. The question is whether this will continue or not - ignoring divestitures and acquisitions which muddy the water.
I think the jury is out on this but do not personally see it as seriously overvalued or a bargain at the current price. We will get more data tomorrow morning.
I continue to feel this is a trading opportunity - selling some covered calls at $70+ but being willing to buy more if it goes back to the low 60's.
Happy to collect the dividends and call premiums at the current price and wait and see.