Procter & Gamble

[crimsonghost747]

What are your thoughts currently?

The way I see it is that they have had a pretty tough few years behind them. Now we are finally starting to see a turn for the better.
But
-revenues are still flat.
-EPS is only going up due to repurchases and tax cuts.
-Lots of headwinds that they are stating, such as currency (the dollar doesn't seem that strong right now tbh), transportation costs etc.
-The dividend is taking out a big chunk of cashflow while only yielding 3%
-interest payments jumped significantly. I don't see their debt as a problem (yet) but maybe, at some point, they will need to do something else than taking on more debt.

It's trading at P/E of a little over 21 right now (using $4.40 as EPS) and the share price is a couple of dollars shy of all time high.

PG is most definitely not a buy.
But would you hold or sell?

[fenders53]

PG is a hold if you already own it IMO.  I think our entry point is very important in these slow growing consumer staples.  If a guy wanted to buy a few shares or slowly dollar cost average then why not?  The recession will  eventually  come, and buying this company with a 15 PE is going to look pretty good a few years later.

[stockguru]

Why would you buy PG at these levels? You had your Chance a few years back when they had all kind of issues and Nelson Peltz was trying to get on the board. With patience you will get anoither opportunity. Right now it’s way, way to high and above its historic PE level.

[DividendGarden]

Agree with fenders53 and stockguru. Hold for now (I'll probably hold forever unless something major changes), but wouldn't buy at these levels. It takes a while to turn the company around, but ultimately, I want to hold the majority of my investments in safe, stable companies like PG, even if it's not the best thing out there. I'll get more benefit from earning more and investing it versus selling PG and redeploying that cash elsewhere.

[EricL]

I see PG being about 10-20% overvalued here at a 21 PE on 2019 EPS of $4.45.

Analysts are expecting ~7% EPS growth going forward, and I expect dividend growth to lag that a bit as PG works the payout ratio back down towards 60%.

Nothing wrong with it here at a 3% yield if you are looking for income, as I see that plenty safe and there's something to be said about a 60+ year streak of dividend growth.

Looking for more growth personally, so I don't own it at this time.

[fenders53]

(01-29-2019, 08:56 AM)stockguru Wrote: Why would you buy PG at these levels? You had your Chance a few years back when they had all kind of issues and Nelson Peltz was trying to get on the board. With patience you will get anoither opportunity. Right now it’s way, way to high and above its historic PE level.

That sounds good, but to some degree it applies to nearly every stock I own.  I should sell them all and wait for a better opportunity.  I'm not going to do that of course, though it might be a brilliant idea.  Personally I am trending toward the "nibble method" since the bull keeps sticking around.  Re-find a quality company I failed to buy a few years ago, then nibble a few shares during a down market week.  Puts the stock right in my face.  I am far more likely to accumulate more shares when the dip does come.  I do want to buy a stock with some potential for growth though.  I can't rationally expect solid DGI growth from a company growing revenues at 2%. because that might turn into -2%.  Otherwise I search for deep value DGI plays in stocks like KHC-MO-ABBV etc. and take larger positions in a shorter period of time.  Point being the only way we seem to get an apparent "deal" in this market is if the company probably has fleas, and then you just hope we don't learn it's a real bad case of fleas 6-12 months from now.  T and GE have taken a lot of victims on the trip down to our buy range.  

Anyway, nobody said this was easy. 

[ChadR]

Like many of the others before me, I view PG as a hold. I wouldn't be buying it (though technically I am since I haven't turned off their dividend reinvestment yet), but I don't see it as extremely overvalued. The dividend is nice. I won't be selling it, I'll just keep holding it.

[fenders53]

(01-30-2019, 08:38 AM)ChadR Wrote: Like many of the others before me, I view PG as a hold.  I wouldn't be buying it (though technically I am since I haven't turned off their dividend reinvestment yet), but I don't see it as extremely overvalued.  The dividend is nice.  I won't be selling it, I'll just keep holding it.

You are doing DRP correctly IMO.  Buy a good company and don't try to outsmart the market over 20 years.  Go back 30 years and DRP all the bluechips until now.  Not enough losers in the bunch to matter.  Today I pool my Divs and decide where to invest, but a better entry price is much more important to me than it was 30 years ago.  There is a fair chance it is a still a waste of my effort.  My trading commissions are about zero so I feel the need to try.

And I see on the other thread you sold half your PG. That's the way to do it IMO. If it runs another 5% you won't feel so much like you messed up. I dumped my MCD that way as I feel better entry points will come soon enough. But if I'm wrong less seller's remorse.

[crimsonghost747]

Thanks for the input guy and gals.

I still decided to part ways with 50% of my PG holdings. Mainly due to the reasons I mentioned in my first post. But since the ship does seem to be turning, I wanted to keep some. I redeployed the cash mainly to RDS. Of course the risk is higher but so are the growth prospects, and on top of that I switched a 3% yielder to a 6% yielding one.