It's been a rather challenging five years for investors in Procter & Gamble (NYSE:PG). While the S&P 500 has risen by a staggering 172% since the bull market of March 2009 commenced, Procter & Gamble has risen by less than half this amount -- making gains of 70%. Does this mean Procter & Gamble is now attractive at current levels?

High entry barriers
Procter & Gamble's key strength is its portfolio of brands. For instance, it makes a variety of household products that many of us Fools use every day. Items such as Gillette, Head & Shoulders, and Pantene are staples of the American grooming regimen and come with a vast amount of brand loyalty. Sure, there are a number of other brands that could perform equally well, and a significant number of supermarket store brands that, on paper at least, do the same job. However, with 25 of its brands generating more than $1 billion in annual revenue, it is clear that Procter & Gamble enjoys the benefits of such a strong portfolio of products.

Indeed, this not only means higher sales (and higher margins, as consumers are willing to pay more for the brands they love), but higher barriers to entry, too. Forming one of Porter's five forces (which are a highly useful means of assessing levels of competition and the relative attraction of an industry), high, barriers to entry are crucial to the success of a consumer goods business such as Procter & Gamble, because they allow the company to charge higher prices and enjoy reduced levels of competition.

For instance, while it is possible for a company to compete with Gillette through acquiring the capital and technical knowledge of how to produce similar products, the entry barriers are high as a result of strong brand loyalty. Even if a new entrant's products were cheaper and better than Gillette's, it's unlikely consumers would switch en masse to the new entrant's products, because they believe Gillette is better, and crucially, they trust Gillette to deliver every time they use the products. The protection from high barriers to entry means Procter & Gamble's income streams should continue to be relatively stable in the future, which is a big plus for investors.

Emerging markets
Brand loyalty and high barriers to entry are also evident at sector peer Unilever (NYSE:UL). It has a strong stable of consumer goods brands but has sought growth in emerging markets to a far greater extent than Procter & Gamble has. For instance, Unilever currently generates 57% of its sales from the developing world, while Procter & Gamble still relies on North America and Western Europe for the majority of its sales, with only 43% coming from Asia, Latin America, Central Europe, Eastern Europe, and Africa. This means that, with emerging markets growing at a faster pace than developed markets, Unilever could tap into a higher growth rate than Procter & Gamble.

Long-run potential
An area where Procter & Gamble could benefit is in the type of products it sells. While sector peer Reckitt Benckiser (OTC:RBGL.Y) focuses on consumer staples, Procter & Gamble concentrates on consumer discretionaries (as well as some staples). This means that, while companies such as Reckitt Benckiser are likely to continue to enjoy success as the developing world increases in prosperity and people begin demanding basic health care and cleaning products, companies such as Procter & Gamble could benefit should incomes rise even further. In other words, as incomes reach a sufficient level for people to significantly increase their consumption of discretionary and luxury items, Procter & Gamble could be well-placed to benefit, while companies such as Reckitt Benckiser are more likely to see revenue level off in the long run as their products become staples in the developing world.

Looking ahead
Shares in Procter & Gamble currently trade on a forward price-to-earnings ratio of 17.5, which seems expensive when compared to the S&P 500's forward P/E of 15.5. However, the premium could be worth it when the strength of Procter & Gamble's product portfolio (and the brand loyalty and the significant barriers to entry it brings) are taken into account, as well as the potential it has to expand into emerging markets -- an area in which it currently appears to be behind sector peer Unilever. As a result, Procter & Gamble could have an exciting and prosperous future ahead of it.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.