Procter & Gamble (PG)

Consumer staples stocks grew on a search for yield. But the problem is the stock price will fall, which is what's happening now as interest rates rise. The lure of yield stocks is not as strong anymore.

Consumer staples stocks have been under a lot of pressure because of who they sell to (buyers are putting pricing pressure on them) and competition from start-up local brands. This is pressuring their margins. She has not owned P&G for years. Back then, innovation flowed through the company (more so than now). They are in beauty care, which she likes, but they have to do more product innovation. The company is trying to do that, but not enough. In this space, she would invest in Mondelez (MDLZ-O) or Unilever PLC (UL-N) because of their exposure to emerging markets.

This is down about 15% this year. From an entry perspective, it is looking more attractive; however, the P/E is still around 19 times. The yield is also supportive. The company has been focusing back to its core brands and this will take time. He would price in some further downside, but sees this as a time to step into 1/3 of your target holding. Yield 3.5%.

A classic consumer growth stock that's struggling now. Today, Facebook and Google are better companies which have the same PE. PG has used all its levers, including buying back stock. Its debt equity ratio has risen. He doesn't own this sector which is out of favour globally. PG is also hurt by the shift in U.S. retail.

This good company has done poorly as of late as investors are looking for growth stocks in fear of higher interest rates. Seasonally consumer staples do well this time of year. He is waiting to see if the US 10 year yield retraces as this stock could be a very good buy. The stock is substantially under-performing the market right now. He would wait until it shows strength again seasonally in August.

From June to October is the right period to buy this. Defensive name. Longer term momentum is not on its side. It is trading a down channel. MSCD is positive diverting. Selling pressure is waning. If you see it go over 75 might be an opportunity to buy.

The group has sold off a but due to a lack of innovation and more competition; it's easier than for e-companies to sell directly to consumers. There needs to be more pricing flexbility given they compete with the Amazons of the world. They're in a margin squeeze. An investor needs exposure in this space. P&G sells defensive products (i.e. lotions) that consumers use daily, but she prefers Unilever given their exposure to emerging markets.

This company needs a shake-up he thinks. An activist investor is now on the Board so this may help. His fair market model value is $81.35. There is better value elsewhere at this time.