Procter & Gamble Co (PG) has been around for 179 years.
Think about that. It was in business when Michigan was admitted as the United States’ twenty-sixth state. Martin Van Buren was president.
That kind of organization has a very long institutional memory. And it has seen a few things in the meantime, like the creation of the Federal Reserve, a Civil War, two World Wars and plenty of other ups and downs in between.
If you’re looking for some stability in this skittish market, PG is a very good choice.
While many analysts are looking at stocks in quarter-to-quarter terms, Procter & Gamble is not on that bandwagon. It has a long view that allows it to march ahead to its own drummer.
What Gives PG Stock Its Long-Term Strength?
That doesn’t mean Procter & Gamble is deaf to the markets, but it is a very well-managed company that knows its strengths, how to deploy its talent and how to dominate its market sectors. Sometimes that means having to change the way you do things.
And at a company the size of PG, that isn’t a proposition that takes just a quarter or two. And the lack of growth relative to competitors makes the headlines while this fundamental shift is taking place. But if you look at the numbers, you can begin to see that Procter & Gamble has been on the right track.
Also bear in mind its competitors like Kimberly Clark Corp (KMB) and Unilever N.V. (ADR) (UN) are half its size or smaller. They have room to grow because they don’t have the massive exposure that PG has.
And even now, Procter & Gamble continues to grow its market share in the U.S. at the cost of its rivals.
And few companies — literally — can boast being one of the top 4 holdings of the Oracle of Omaha, Warren Buffett and his Berkshire Hathaway Inc. (BRK.A, BRK.B). Recently BRK sold its stake in PG, but it wasn’t out of concern. It actually bought Procter & Gamble’s Duracell division and used the stock as payment back to PG … that effectively means that deal was a quick $4 billion stock buyback.
Yes, a strong dollar has hurt PG sales abroad. But it has been restructuring its business toward innovation and a focused approach to its product line. As one of the pioneers in pitting brands in the same categories against one another, Procter & Gamble has now moved on to a new strategy: focus and innovate.
In the last year, PG has almost halved the number of brands it supports. And it has put a lot of emphasis on innovations, like the pods for laundry detergents and scent beads in fabric softeners. And PG stock is seeing this approach begin to pay off.
PG stock isn’t a stock that you should want to take off. It’s a steady grower that will not disappoint over the long-term. And remember, it knows something about the long-term.
Richard Band’s Profitable Investing advisory service helps retirement savers outperform the market without losing a minute of sleep along the way. His straightforward style and low-risk value approach has won seven Best Financial Advisory awards from the Newsletter and Electronic Publishers Foundation.
