The Coca-Cola Company (KO), Wal-Mart Stores, Inc. (WMT), Microsoft Corporation (MSFT): The Dow (.DJI)’s 5 Most Loved Stocks

Procter & Gamble

Why are short-sellers avoiding The Procter & Gamble Company (NYSE:PG)?

As you’re probably noticing by now, short-sellers tend to avoid easily recognizable brand-name companies — and few companies have as many consumer-goods products as P&G. What’s really exceptional about P&G, and a primary reason short-sellers tend to stay away, is that many of its products are impervious to economic downturns. With some minor exceptions where consumers trade down to store brands, consumers need to buy toothpaste, detergent, and other consumer goods in the best and worst economic environments. This leads to solid pricing power and steady cash flow, which is the enemy of most pessimists.

Do investors have a reason to worry?

Like Microsoft, there is a little bit of management change uncertainty, with A.G. Lafley retaking the CEO position from the recently retired Bob McDonald. However, this is a case where nearly all shareholders are thrilled with the move. Lafley was responsible for significantly building P&G’s brand value last decade and should be able to take P&G’s world-leading advertising budget and further enhance P&G’s top line. With P&G maintaining strong pricing power and being a selection for the Basic Needs Portfolio, I see no reason for short-sellers to be interested in this company.

The article The Dow’s 5 Most Loved Stocks originally appeared on Fool.com and is written by Sean Williams.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of, and recommends Berkshire Hathaway. It also owns shares of General Electric and Microsoft, and recommends Coca-Cola and Procter & Gamble. 

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