The Procter & Gamble Company (PG): What To Do, What To Do?

Increasing shareholder value

Besides, there is also another aspect of the earnings presentation that has probably not got the attention it deserves.

The company had earlier announced that it will spend $4 billion to $6 billion on share buybacks. Initially, the figure announced was at the lower end, $4 billion. During its earnings call the company has now fixed that figure at the upper end, $6 billion. This can only increase shareholder value and add a growth dimension to an extremely stable stock like P&G.

Conclusion

Anyone who bought the stock ten years ago at around the level of $45, has seen his/her investment give an almost 100% return –36% ($16.09) by way of dividends and an appreciation of 72%. If we take into account reinvestment of cash dividends received and the stock split of June 2004 into account, this translates into a return exceeding 300%.

It is my considered opinion that diversification, stability and growth are the three attributes of a strong portfolio. P&G is one of those stocks that should be a part the portfolio of every long term investor who subscribes to this theory.

Forget how the stock reacts to earnings, just go ahead and accumulate the stock at every substantial dip. You will see that traders pulling the stock down are actually doing a good service to you.

The article This Underperforming Stock Is Still a Strong Buy originally appeared on Fool.com.

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