Paul Harris, CFA
Gillette Co
G-N
BUY ON WEAKNESS
Jun 30, 2005
New management is better placed to take the company to new levels. Company is now a little more diversified from gold. Fairly valued at these levels. Wait for a hiccup along the way. Prefers Barrick (ABX-T) which is cheaper.
G is a top rated supplier of business outsourcing services worldwide — a steady and reliable business. We like that cash reserves are growing, while debt is retired and shares bought back. It trades at 17x earnings, 3.6x book and supports a respectable ROE of 22%. We recommend setting a stop-loss at $35, looking to achieve $59 — upside potential over 18%. Yield 0.7%