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Diamond Foods, Inc. (DMND), The Procter & Gamble Company (PG): Investors Have Been Going Nuts Over This Stock

The Procter & Gamble Company (NYSE:PG) has brought back A.G. Lafley as CEO to shake things up at the consumer products giant. He has divided the company into four organizations reporting to him – baby, feminine and health care, beauty, health and grooming, and fabric and home care. Expectations are for the company to be transformed for the better, as it was under Lafley from 2000 to 2010.

The sale of Pringle’s follows the company’s overall strategy of selling non-core assets. Lafley will likely continue with the plan that he started while he was CEO before. Possible targets within The Procter & Gamble Company (NYSE:PG) for sale are pet food brands Iams and Eukanaba, battery maker Duracell, or some of its OTC medicine brands. None of these divisions really fit into the new The Procter & Gamble Company (NYSE:PG). Cash from these sales could fund a game changing acquisition like Lafley did when Procter & Gamble bought Gillette.

Kellogg, on the other hand, has been firing on all cylinders since the Pringle’s deal. The stock is up over 30% in the past year. Kellogg was able to add Pringle’s chips to go on the grocery shelves, along with its Kellogg cereals and Keebler cookies.

What I like most about Kellogg is that the company is focused on its core business and is not in need of a turnaround. The company continues to improve its position as the leading breakfast cereal company in the world, even as it continues to innovate and introduce new products. The company does a great job of monitoring its customer’s preferences and can adjust accordingly. Currently, the company is introducing healthier versions of its breakfast cereals as more consumers become more health conscious.

How they compare

Diamond Foods Procter & Gamble Kellogg
Market Cap $390.39 million $213.97 billion $23.20 billion
Revenue $910.98 million $83.72 billion $14.62 billion
Gross Margin 0.20 0.50 0.38
EBITDA $45.53 million $19.70 billion $2.13 billion
Operating Margin 0.02 0.20 0.11
Net Income ($77.54 million) $11.36 billion $921.00 million
P/E N/A 17.49 24.78

Foolish assessment

If management can turn around Diamond Foods, shareholders will no longer feel nuts for holding onto the stock. Diamond has a great collection of assets and consumers know their products. Procter & Gamble is a great company and A.G. Lafley is certainly the man who can get the company focused and moving in the right direction. Kellogg continues to perform well, and the Pringle’s acquisition has added to the company’s success. For shareholders, Diamond Foods is the most speculative, but offers the most upside. Either way, consumer staples is a great sector to be in as they will always be on every grocery store shelf.

The article Investors Have Been Going Nuts Over This Stock originally appeared on Fool.com.

Mark Yagalla has no position in any stocks mentioned. The Motley Fool recommends Procter & Gamble. Mark is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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