While equity markets have slumped worldwide and especially the tech stocks have suffered drastic losses, Procter & Gamble recently climbed to a new twelve-month high. What makes the stock so attractive?
Defensive stocks are traditionally considered a safe haven in times of falling stock markets and a weakening economy. The US consumer goods manufacturer and world number one player in the industry, Procter & Gamble, is benefiting most from this trend this year. The stock, which is included in the US benchmark index Dow Jones, has experienced an equally spectacular comeback after a deep fall in the spring to around $71, or $20 less than at the beginning of the year.
In the past week, they even climbed a new twelve-month high at just under $94. Analysts explain the revival with the good business development. Thus, the consumer goods group in the first fiscal quarter (end of September) outperformed, thanks to an unexpectedly strong demand for cosmetics and cold remedies.
The burden of the strong dollar has also taken the group surprisingly well. Sales of the Gillette, Pampers and Ariel manufacturers, adjusted for currency effects and sales, were $16.7 billion, four percent up on the previous year. That was the strongest increase in five years. Analysts had predicted on average to a decline. The profit increased by twelve percent to 3.2 billion dollars. In part, this was due to proceeds from the demise of a joint venture with generic drug maker Teva. Adjusted for one-time items, earnings were $1.12 per share, which was also more than expected in the market.
It has been a long time since the Group exceeded expectations, according to analysts at RBC Capital Markets. It looks the measures P & G has begun to bear fruit. The group had expanded its online business, cut costs and revived its brand portfolio.