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The Procter & Gamble Company Message Board

  • techglass1 techglass1 Jan 24, 2013 5:09 PM Flag

    Why you should sell P&G at $71 a share

    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.

    Sentiment: Strong Sell

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    • 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.

    • Brilliant analysis. Your 71/share sell price works great for me. Congrats.

      Sentiment: Buy

    • 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.

      Thanks for your opinion and good luck to you.

 
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76.70-0.69(-0.89%)Jul 31 4:02 PMEDT