|Instrument:PROCTER & GAMBLE|
Procter & Gamble is a true giant in the consumer goods space, with the company boasting dozens of products and more than $67 billion in revenues in 2019. P&G is one of the most recognisable brands in the world and it is the manufacturer of popular consumer goods, such as Always, Ariel, Oral-B, Gillette, Luvs and Old Spice. The company was founded by William Procter and James Gamble on October 31st, 1837, and it is headquartered in Cincinnati, Ohio, USA. While P&G takes up a huge space in its field, its starting point was rather humble. The two founders started by making and selling candles and soap. The strategic location of Cincinnati fueled its initial growth, as it had numerous rail and shipping routes. The company continually innovated and differentiated their products, and by the turn of the 20th century, P&G was well on top of the cleaning industry.
By the 1930s, P&G had started expanding its product portfolio, by marketing themselves as singular businesses that competed with other companies’ products as well as those manufactured by the company. Throughout the 20th century, P&G boosted its expansion efforts by making acquisitions in various other industries. A major acquisition that stands out is the 2005 buyout of Gillette in a deal worth $57 billion. In the 21st century, the company has sought to streamline its operations, making huge divestitures to concentrate on its major and most profitable brands. Procter & Gamble is listed on the NYSE, where it trades under the ticker symbol PG. It falls in the Consumer Defensive sector, under the Household & Personal Products industry.
PG Stock History
The Procter & Gamble Company has performed six 2-for-1 stock splits in its history, with the last one being on June 21st, 2004. The company has historically performed stock splits during boom times, with the 2004 one coming off the back of a 10% jump in gross sales. P&G is a major seller of consumer staples; products that are considered noncyclical. The PG stock is thus a stable, defensive stock that is sometimes immune to economic conditions, and this is well reflected in its price history. Adjusted for splits, PG has largely maintained an upward trajectory since mid-2000. From a price of circa $30, the stock steadily climbed to highs of around $75 by December 2007, with the financial crisis at the time triggering a small pullback to lows of just below $50 by March 2009. Since then, the stock has sustained a gradual positive trajectory that saw it hit an all-time high of just above $146 in October 2020. Because it operates in a stable industry, PG is one of the most consistent dividend payers on Wall Street. This makes the stock even more attractive especially during downturns when investors have an opportunity to enjoy the regular income.
How to Trade PG Stock
Consider these factors when trading PG stock:
- Legislative and Taxation Issues
P&G operates over 140 production facilities located in the US and in over 40 countries around the world. This means that the company’s business is subject to regulation in the US and abroad. Changes in laws and regulations can significantly impact P&G’s business environment. The company has to deal with legal and taxation challenges in the areas of patents, counterfeits, intellectual rights, environment, and even accounting standards.
- Changes in Consumer Demand Patterns
P&G’s success relies on the continued global demand for their products or brands. The company has always been a major investor in research and development and has always defended its turf by investing heavily in distribution and massive advertising. Still, a minor change in demand and growth rates can make a huge difference to the company’s bottom line. The global consumer market is very conscious nowadays, and it is plausible that demand patterns can shift in an instant and change the picture for the PG stock entirely.
- Cost Pressures
P&G is a massive consumer company with footprints around the world. This places some significant cost pressures on the company’s business. The company has to deal with fluctuations in the cost of raw materials, labour, forex, interest rates and commodities. The ability of the company to manage such fluctuations, using creative and innovative measures such as outsourcing and other important decisions, can determine the fate of the PG stock.
- Periodic Earnings Reports
P&G’s fiscal year runs from July to June, and the company’s earnings report dates are important calendar days for investors. The reports show the business health of the company and reveal metrics such as revenues, dividends and future guidance. Positive numbers usually trigger higher stock prices whereas negative figures often inspire lower stock prices.
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Procter & Gamble Stock FAQ
- Why should I trade Procter & Gamble shares?
Even if Procter & Gamble isn’t a name everyone knows, it’s a name that everyone uses. The company has some of the largest consumer goods brands in the world, and as an investor the stock has performed very well, rising steadily for decades while also paying out a healthy dividend. More recently the stock received a boost from the COVID-19 pandemic as cleaning and paper products came under heavy demand from consumers. The stock has seen increased interest as well, making it a good choice for traders.
- Is Procter & Gamble the best consumer stock for trading?
Consumer goods stocks tend to be less volatile than other sectors, but they also have very good volumes and liquidity. That can make them a good choice for swing traders, but not as good for scalpers. In terms of trading Procter & Gamble shares this is one of the largest and best-known consumer goods companies in the world. Traders can often take advantage of this by following news and product releases. While there are probably other consumer goods stocks that are better for traders, the volumes and visibility of P&G makes this a suitable stock to keep on a watch list and trade when conditions are right.
- What’s the best strategy for trading Procter & Gamble shares?
Because Procter & Gamble is a stock that has trended very well for decades there’s no reason to follow any strategy other than a trend-following strategy. Traders should be well rewarded by putting this stock on a watch list and buying on the dips. These can be infrequent though, so patience is going to be required when looking for major pullbacks. On shorter time frames the same strategy can work, however profits will understandably be smaller as P&G tends to be a fairly stable stock without huge daily moves in most sessions.