Procter & Gamble: A competitor difficult to catch up
The Procter & Gamble Company (NYSE:PG) (P&G ) markets its beauty, grooming, health care, fabric care, home care, and baby care products in roughly 180 countries, holding more billion dollar brands than any of its competitors in the household goods industry. Its wide international presence, brand penetration, and several benefits derived from its scale provide this firm with a wide moat that will help keep its peers at bay and the company profitable for quite a long time.
Although some missteps have impacted the company´s market share lately, long-term prospects still look encouraging. Growth might be slow, but sustainable at a 7.65% consensus annual EPS growth rate for the years to come; meanwhile, the firm should continue to pay out consistently increasing dividends — projected at 3.1% — and further return value to stockholders by repurchasing stock. It seems important to highlight that The Procter & Gamble Company (NYSE:PG) possesses a bulky cash mattress and about 90% cash flow productivity to back these and other expenses, including acquisitions, product innovations, and brand development (Zacks).
Although some analysts doubt the possibility of a complete turnaround after a weak fiscal 2012, management’s $10 billion cost-saving plan that includes layoffs, material cost reductions, and efficiency improvements seems pretty encouraging to me. Several other elements portray an encouraging outlook for the years to come; namely, a strong focus on product innovation and marketing, a robust presence, and plenty of expansion opportunities in emerging markets and various initiatives aimed at ameliorating its product portfolio’s value.
Trading at 19.3 times its earnings and 3.2 times its book value, more than a 27% discount to the industry’s mean valuations, I’d recommend buying and holding this stock while reinvesting dividends earned to widen your gains in the long-term.
Above, I have reviewed three huge consumer product companies that seem poised to deliver steady and sustainable growth for a long time while paying out dividends that can even be reinvested into them, further enhancing long-term returns. The Clorox Co (NYSE:CLX), Colgate-Palmolive Company (NYSE:CL), and The Procter & Gamble Company (NYSE:PG) are three firms that you should add to your retirement portfolio, as they present some of the lowest business risks within publicly traded enterprises.
The article 3 Stocks for Your Retirement Portfolio originally appeared on Fool.com and is written by Damian Illia.
Damian Illia has no position in any stocks mentioned. The Motley Fool recommends Procter & Gamble. Damian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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