1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Holly LaFon
Holly LaFon
Articles (9418)  | Author's Website |

Steven Romick Comments on Proctor & Gamble

Guru stock highlight

February 07, 2019 | About:
Proctor & Gamble (NYSE:PG), or P&G, the storied consumer products company, is an example of a company we don’t own. Like many consumer staples companies, its moat is still substantial but not what it once was. The result is earnings growth of less than 2% over the past seven years, but its stock inexplicably trades at 20.8x 2019 consensus earnings estimates. Nonetheless, the Fund would have been better off owning it rather than many of its existing positions last year, as P&G delivered a total return of 3.57%. Yet P&G’s historic growth rate is lower than the Fund’s portfolio companies, which more importantly in our eyes, trade more inexpensively and offer better growth prospects. P&G is no better nor worse than a number of other consumer staples companies we could have discussed.


We find this illogical. Maybe the valuation disparity is due to expectations for a weaker economy that might allow consumer staples to outperform for a time. Or maybe it is due to passive investing, which makes indiscriminate purchases as a function of inflows. However, if the stock market didn’t offer irrational moments, everyone would invest in passive vehicles, and we wouldn’t be in business. We prefer our portfolio.




From Steven Romick (Trades, Portfolio)'s Crescent Fund fourth quarter 2018 shareholder letter.

About the author:

Holly LaFon
I'm a financial journalist with a Master of Science in journalism from Medill at Northwestern University.

Visit Holly LaFon's Website


Rating: 0.0/5 (0 votes)

Comments

Please leave your comment:


Performances of the stocks mentioned by Holly LaFon


User Generated Screeners


jbucheliHighly Leveraged
jbostwickosv growth 50% gpa MidCAP Best
crmaasteste2
mgr1929Start%20screening%20here
pbarker46Start screening here
tnavasardianNA high yield
shahrukhshahzadZULU
peterc123Netnet 2019
5dmeyerJoel Greenblatt screen
ricardo9959Parecida DIS v2
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GF Chat

{{numOfNotice}}
FEEDBACK