Please ensure Javascript is enabled for purposes of website accessibility

Why Procter & Gamble Is a Buy

By Demitri Kalogeropoulos – Oct 12, 2021 at 9:30AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A few good reasons to like P&G stock.

Manufacturing is a tough business. But some companies have built major competitive advantages in that niche.

In this video from "The 5" on Motley Fool Liverecorded on Oct. 4, contributors Brian Withers and Demitri Kalogeropoulos discusses why Procter & Gamble (PG -0.76%) is a manufacturing giant worth investing in.

10 stocks we like better than Procter & Gamble
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now... and Procter & Gamble wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks


*Stock Advisor returns as of September 17, 2021


Brian Withers: We're focusing a little bit on the question here on manufacturing. Do you have a favorite business that relies on manufacturing to make money? Then the part 2 of that question is, [laughs] what country are their manufacturing facilities and certainly what is the business? Demitri you are up first.

Demitri Kalogeropoulos: Sure, yeah. When I think manufacturing giant and titan, someone who has got this thing down, I just think of Procter & Gamble. That company just popped in my head. Of course that's a global business and everyone's heard of them. You've got dozens perhaps, of their products in your house right now, just to name a few of the things of it. This company basically has the number 1 or 2 market share in, like I said, dozens of products that people use around the world every day.

One of their big categories is laundry, detergent, fabric care and then we got Crest toothpaste, things like bounty paper towels, which I believe, if I remember right, I think they account for more than 40 percent of global sales of paper towels; that's an amazing statistic.

Pampers, diapers, I think that's their second biggest brand globally. Obviously, that company can't have just one country of manufacturing. They have a global manufacturing network, massive supply chain. But manufacturing is a huge emphasis of theirs because they have to be able to innovate. Packaging is actually one way that a company like that can stand-out from competitors and it's a big one. They spend a lot of time on that, making an easy packaging and the whole supply chain adding value wherever they can. P&G is an interesting stock to follow. They were doing really well before the pandemic.

They had a rough go around the 2012-2015 area there, but they had turned the business around. They were growing their organic sales a lot quicker for three or so years, heading into the pandemic. Then since the pandemic, they've just expanded that. They've built on those wins. They are growing more quickly. Their operating profits are expanding and they've cut many billions of dollars out of their expense burden and a lot of that in the manufacturing zone in the supply chain. That's showing up in their profitability. Their operating margin, I checking today is 24% of sales compared to 14% for Kimberly Clark, which is a competitor they compete with Pampers.

They've got the Huggies brand diaper, for example, and a bunch of other products. P&G is able to still report these really great earnings numbers because of that efficiency and their innovative launch on a bunch of these products. The company is going to be reporting earnings in late October. I'll be watching that.

They're kicking off a new fiscal year. The stock I have been liking for a while now. It's been trailing the market for the past year, which I guess, Wall Street is more interested in other splashier growth areas.

But this is a dividend aristocrat, great cash flow, market-leader, really great profits, and an opportunity to expand on those margins.

Maybe in late October they can change that investing story a little bit and attract more people into the stock. It's a great stock in any case.

Demitri Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Procter & Gamble Stock Quote
Procter & Gamble
$145.48 (-0.76%) $-1.12

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.