PG: Proctor & Gamble
Product Conglomerate, mostly with consumer goods
Recent Range: $47/share – $73/share (Current Price: 65.56, as of close of 12/14/10)
Price/Sales (P/S) = 2.26 (2.06, Industry)
Price/Book (P/B) = 2.87 (5.06)
Gross Margin = 51.8% (52.0%)
Pre-Tax Margin = 19.1% (16.9%)
Debt/Equity Ratio = 0.52 (0.71)
Current Ratio = 0.7 (1.0)
Return on Equity = 17.0% (28.9%)
Return on Assets = 8.1% (9.9%)
Analysis: This company is well-run and in excellent financial health. This stock is SAFE but unexciting.
A lot of things would need to go wrong for this company to hit bankruptcy. Since they make so many different products, and so many people use those products. So owning this stock is sort of like owning a diverse mutual fund. Largely, you are protected against huge drops.
It pays a decent dividend (roughly 3%) which is known to grow each year. This is nice, especially since it is such a stable company.
However, this stock seems to be about the right price, meaning that the dividend is about the only thing you can figure is likely to make you money. The price seems to cycle between $50 to $70/share. So you might be able to play with this somewhat predictable cycle and make chunks of money.
Even the RSI and Slow Stochastic technical indicators seem to discourage buying this stock right now. The MACD suggests that it might be a good time—possibly on the upswing.
I would not suggest buying this stock, unless you just want to get paid 3% annually. It’s a good one for retirees who are living from the dividend. It’s a bad one for people who NEED to sell this stock since the price is a little volatile and not necessarily prone to growth.
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