P&G's Gains Slow the Dow's Plunge

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The markets have fallen into a sea of red today as stocks drop across nearly every sector. The Dow Jones Industrial Average (DJINDICES: ^DJI  ) has taken a pounding from the opening bell, and as of 2:15 p.m. EDT it has lost more than 120 points. Most stocks are down on the blue-chip index, but Procter & Gamble's (NYSE: PG  ) doing its best to hold off the Dow's losses with a strong performance for investors. Let's catch up on what you need to know.

P&G's upside for the long term
Procter & Gamble got a boost today after Wells Fargo bumped the stock's rating up from "market perform" to outperform. The analyst cited the firm's cost-cutting moves in the raise, and P&G's stock has responded by jumping 1.4% to lead the Dow. It's a fair assessment: P&G hopes to save up to $10 billion by 2016 by slashing costs, which it desperately needs to do after sales turned sluggish and weighed on the consumer giant's growth prospects.

The company posted organic sales growth of 3% in its most recent fiscal year -- the same number it notched in 2012 -- although foreign-exchange fluctuations took that total down to 1%. Still, growth has become elusive among P&G's top businesses. Its health care business has performed well and will likely remain one of P&G's top growth-drivers, as the consumer health industry is set to continue its steady march higher for years to come both internationally and in the U.S.

For all of P&G's growth woes, however, this is still one of America's most powerful consumer giants. P&G offers up a 3.2% dividend yield with a manageable payout ratio of 59%. Assuming the U.S. economy continues its rebound from the recession, increasing consumer spending should help the company's sales in coming years. For the long-term investor, P&G's a strong, stable foundation with which to anchor a portfolio -- even if it won't light up the market on a day-to-day basis.

Unfortunately, Dow heavyweight IBM (NYSE: IBM  ) is canceling out P&G's gains (and then some) with losses of 1.6%. IBM had disputed's (NASDAQ: AMZN  ) winning bid for a $600 million cloud-computing contract for the CIA after Amazon Web Services beat IBM and several other contenders. The appeal is over today, as a judge sided with Amazon in the dispute.

IBM has invested a lot of money into its cloud-computing business, so this is a setback for the firm as it tries to court government contracts and other sizable deals. Considering that IBM's revenue has taken a big hit this year, falling about 4% year over year in the first six months of 2013, this company could have used the big contract to lift the spirits of its shareholders. IBM's stock has fallen more than 6.6% over the past three months, and Big Blue will need to shake things up in order to dig out of its slump.

How tech can charge up your portfolio
IBM's fighting for dominance in the tech world, but the leaders of this fight are scrapping for a huge prize. The tech world has been thrown into chaos as the biggest titans invade one another's turf. At stake is the future of a trillion-dollar revolution: mobile. To find out which of these giants is set to rule the next decade, we've created a free report called "Who Will Win the War Between the 5 Biggest Tech Stocks?" Inside, you'll find out which companies are set to dominate, and we'll give in-the-know investors an edge. To grab a copy of this report, simply click here -- it's free!

Read/Post Comments (1) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 08, 2013, at 5:16 PM, Truth2Power wrote:

    P&G had a nice, boring Annual Meeting today. Just the kind the Market likes! Let's hope Lafley can deliver on his plans.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2674098, ~/Articles/ArticleHandler.aspx, 10/1/2016 11:43:32 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 14 hours ago Sponsored by:
DOW 18,308.15 164.70 0.91%
S&P 500 2,168.27 17.14 0.80%
NASD 5,312.00 42.85 0.81%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/30/2016 5:01 PM
^DJI $18308.15 Up +164.70 +0.91%
IBM $158.85 Up +0.74 +0.47%
IBM CAPS Rating: ****
PG $89.75 Up +1.52 +1.72%
Procter and Gamble CAPS Rating: ****