Procter & Gamble Co Is a Great Widow-and-Orphan Stock
For stock chart enthusiasts, the long-term chart of consumer packaged goods company Procter & Gamble Co (NYSE:PG) tells the story of impressive sustainability and long-term performance that makes PG stock a staple for widow-and-orphan stock investors.
Go around your home and I bet you have at least one of Procter & Gamble Co product lying around. Whether it’s for body care or household needs, Procter & Gamble Co makes it.
PG stock has been under some recent pressure, down from its 52-week high of $90.33, but there could be better times around the corner.
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PG stock traded at the $5.00 level way back in 1989, prior to a breakout on the chart that would so far last over 25 years. And, along the way, not only did investors benefit from a rising share price for Procter & Gamble stock, but they received a consistent dividend.
My Bull Case for PG Stock
Procter & Gamble stock is one of the top dividend stocks ever seen, and it represents an ideal addition to long-term conservative portfolios seeking income and capital appreciation.
Take a look at the current chart situation for PG stock. The stock broke lower from its intermediate trend in mid-October to below its 50-day and 200-day moving average (MA).
Chart courtesy of StockCharts.com
PG stock is slightly underperforming the S&P 500 year-to-date with a 4.37% gain, but it is outperforming the index, advancing 9.38% over the past year.
Since staging a 28% “V”-shaped rally from $64.00 in mid-September, Procter & Gamble stock has been gaining ground prior to the roadblock. If PG stock can hold up and attract buying support, we could see the stock rally to the $90.00 level.
But even if a rally doesn’t formulate immediately, Procter & Gamble stock could be held for the long-term while getting paid a dividend.
Procter & Gamble Co needs to address its two straight fiscal years of declining revenues, however. There are estimates calling for some small growth in FY17 and FY18, which should help to support the PG stock price.
Wall Street seems more confident toward Procter & Gamble stock. There have been 11 earnings per share (EPS) revisions for FY17 over the last 30 days versus eight lower revisions. (Source: “The Procter & Gamble Company (PG),” Yahoo! Finance, last accessed November 10, 2016.)
The outlook seems mixed now for PG stock, but for long-term patient investor sentiment, you cannot bet against the ability of Procter & Gamble Co to deliver.
For instance, the in-the-money January 2018 $82.50 calls currently costing $5.51 imply a reasonable break-even price of around $88.00 for PG stock.
That’s reasonable, and if traders want to lower the cost of their trades, they can also concurrently sell a higher price call to collect a premium and establish a bullish call spread. Remember, this is not a recommendation, and is only provided as an example.