Proctor and Gamble (PG)

I wrote previously about how I really like Proctor and Gamble (PG), especially when it dropped last week.  Well, I found someone else who agrees with me!

This is what Investopedia had to say:

First and foremost, its products (beauty, healthcare, and a variety of name brand consumer products) will sell regardless of whether or not the U.S. economy heads into a recession.The second reason I like it is because in difficult economic times, funds tend to scoop up the shares as a hedge against the trying economic conditions. This means that the individual investor has the opportunity to make a lot of money, particularly if they get in before the herd.

The third reason is that strong sales in its “blades and razors” business, and P&G’s ability to pare down costs, should allow the company to earn as much as $3.03 a share in 2007, and possibly as much as $3.47 a share in 2008.

That implies a roughly 15% growth, which is quite impressive for a company of such size.

But even beyond those things, the company continues to land lucrative deals and partnerships with fast-growing companies that could very well drive those earnings estimates up even further.

For example, it recently inked a deal with Dunkin Donuts to distribute its coffee to grocery and club stores as well as a number of mass merchants.

What does this partnership mean in terms of dollars and cents? It’s too early to tell for sure. But the Dunkin name is huge, and I suspect that the product will sell quite well in supermarkets given Procter & Gamble’s marketing clout, and ability to obtain prime real estate (shelf space) in stores. Not to mention that Starbucks (SBUX) has seen its coffee products (particularly its Frappuccino line) sell quite well at the retail level.

The Bottom Line
Based upon current earnings expectations, I think that the stock is worth $75 within a year, implying a potential upside of about 19%. And if the Dunkin deal pans out as well as I think it can, and the company is able to continue landing other similar relationships, I think that the stock (and earnings) could be headed even higher.

By the way, for you value players out there, the shares sport a dividend yield of about 2% to boot.

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