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The Procter & Gamble Company (PG), The Coca-Cola Company (KO): Fortifying the Portfolio in Case of a Downturn

I love it when the market goes up. It means all those bulls and potential retirees out there are growing their money. So what am I complaining about? Well, this market has been going up for some time now. It even continued on the up after a bad jobs number on Friday. Surely it’s going to come to a stop soon…

What if it Does?

If the market does pop itself into correction mode then the best place to be is as far away as possible. Obviously, I’m not the market. I can’t tell you that it will, or will not, grow today, tomorrow, or next week.

With Mr. Market taking full control, I believe the best way to achieve the gains and still win out in a bear like environment is to buy household names.

There are plenty of names out there, and some are probably already in your portfolio. For the purpose of this article, I’m going to focus on the ones I believe will continue to win out, the companies that will keep their products moving.

The Coca-Cola Company (NYSE:KO)In the interest of keeping the article interesting, I tried to pick three big companies in three distinct areas. Those three companies are The Procter & Gamble Company (NYSE:PG), Altria Group Inc (NYSE:MO)and The Coca-Cola Company (NYSE:KO).

What They All Have

All three of these companies have their own carved out industries that are separate from each other. The Procter & Gamble Company (NYSE:PG) sells home based products such as shampoo, Old Spice brands, and shaving foam, while Coca-Cola is known for selling their namesake drink. Altria sells tobacco, so this may not be one for your portfolio.

All three of these companies also offer dividends that have been growing for years. Altria Group Inc (NYSE:MO) comes along with a 4.95% yield, Procter & Gamble is carrying a 2.85% yield, and The Coca-Cola Company (NYSE:KO) will give you 2.74% back.


Growth is something that we want from our portfolios, and all three of our companies have it.

When it comes to sales growth, the best company out of the three is Coca-Cola over the last year. Coca-Cola had 3.8% sales growth, well below the 57.6% for the beverage industry, but a great amount for such a large company. Altria Group Inc (NYSE:MO) had sales growth of 1.8%, beating the industry’s 1.7%, and Procter & Gamble slightly underperformed their industry’s 2.8% growth with 2% of their own.

Net income over the last five years is the only area in growth that we see a stumble from one of our companies. Annualized five year sales growth for The Procter & Gamble Company (NYSE:PG) is -1.27%. Don’t worry about that number though, as Procter & Gamble won’t falter too much from it.

Price Ratios

Price ratios for these companies are all right in line with their industries as a whole. The Coca-Cola Company (NYSE:KO) has a P/E ratio of 20.7, and that’s slightly below the industry’s 21.2. Altria has a P/E of 17.2, below their industry’s 18.2, and The Procter & Gamble Company (NYSE:PG) is trading at 20.1 times earnings.

The one price ratio that pops out as being extraordinary at these three companies is the price to book value of Altria. The company’s price to book is at 22.5, which is well above the industry’s 7.18. While this may trouble some people with strict buying patterns, I’d tell you not to worry. Smoking, no matter how bad it is, will continue for many years to come. You won’t need to be worrying what book value you paid for the company.

Analyst Ratings

These three companies are all right around the buy/hold rating range. Coca-Cola is sitting the best currently with a 1.8 rating from fifteen analysts, with twelve of those giving the stock a ‘strong buy’ rating.

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