Is P&G A Gamble Or Sure Bet
Tide detergent has also become a black market commodity, of all things, and it’s because it’s a recognizable, desirable brand name. Or so say several crooks who’ve been boosting it to sell for pennies on the dollar. Isn’t it a little heartwarming to think lowlifes care about clean underwear? Tide is just one of the many iconic brands under the Procter & Gamble umbrella.
P&G ‘s P/E is getting somewhat extended here at 17.37 and at 52 week highs. Its yield is 2.90% and PEG is 2.37. While P&G is a Dividend Aristocrat, competitors in the consumer staple space like The Clorox Company (NYSE:CLX), Colgate-Palmolive Company (NYSE:CL), Unilever plc (ADR) (NYSE:UL) and Kimberly Clark Corp (NYSE:KMB) are better values. Procter & Gamble is relying too much on consumer staple brand loyalty when that is a concept that fading away like landline phones.
Analysts only expect 7.95% five year growth (yoy) compared to the Apple growth rate of 18.95% and have a median price target of $80.00, which is around 5% upside. Ho-hum.
Into The Mouths Of Babes
Maybe it’s been years since you’ve bought formula but it’s often locked behind glass cases these days. The criminal element calls it “liquid gold” and the problem has escalated so that the FBI and Customs has had to get involved. As the formulation of formulas are regularly improved with new pediatric nutrition findings prices get raised making them black market darlings.
Mead Johnson Nutrition, global infant formula and children’s nutritional maker, was having a pretty great year from May 2011 through the summer of 2012 when it surged from $55 to its 52 week high of $88.72 and then released Q2 earnings in July that revealed it had been losing market share in China and foresaw a weaker second half than previously guided. The stock sold off big despite a 26% profit surge from infant formula sales in emerging markets (save China.) Ouch!
Since then CEO Stephen Golsby managed to keep his promise that Chinese share would pick up and the Q4 earnings release proved it with Chinese market share back up to 11.7% and non-GAAP EPS growth of 10% sending shares up double digits.
Mead Johnson Nutrition is trading at a pricey 26.96 P/E and has a 1.50% yield. Analysts expect 11.05% five year EPS growth (yoy) and have a mean price target of $81.00 with a high price target of $95.00.
Do You Trust A Fox?
Maybe you don’t trust a teenager who’s outperformed the S&P with a 30% return. She likes oversold stocks and that would be Apple. I think it’s still a steal but the other two are definitely wait and see with Mead Johnson Nutrition being the better deal with more growth going forward, but Apple beats them all.
The article Out Of The Mouths Of Babes Come Stock Ideas originally appeared on Fool.com and is written by AnnaLisa Kraft.
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