The Procter & Gamble Company (PG) continues innovating and building value for its brands of household personal hygiene items, raising the dividend and lifting the stock price up potentially by 50%, says Gary Bradshaw, Senior Vice President and Portfolio Manager at Hodges Capital Management.
“The stock is not necessarily dirt cheap, trading at about 18.5 times this year’s earnings, but it is a fabulous company that I think will trade at a premium to the market multiple. Procter & Gamble over the next three years could earn $6 a share. You put a 20 times multiple on that, and I can see how Procter & Gamble could eventually be a $120 stock,” Bradshaw said.
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Bradshaw says PG has brands worth $26 billion and the company has a history of raising the dividend for 52 straight years, most recently by 7%. Some of its brand innovation can be found in the ubiquitous Gillette razors, Head & Shoulders shampoo and Tide detergent.
“Think of Tide detergent. Five or six years ago my wife would send me to the store to get a box of Tide, and I’d bring out this great big orange box. Then three years ago, I’d go get this gallon jug of Tide liquid detergent. Today, I buy Tide PODS, which are little packets that have the detergent, the freshener and the softener all in one,” Bradshaw said. “It’s very innovative, what they’ve done.”
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