Filed Under:
Tickers in this Article: PG, CL, WMT, TGT, GOOG, YHOO
The investment community has been preoccupied with earnings lately, and like almost every other quarter, much media attention seems to focus on the technology space. It is understandable to a degree, because companies like Google (Nasdaq: GOOG) and Yahoo (Nasdaq: YHOO) are indeed exciting and very popular. But that doesn't mean that investors should forget about other market areas - specifically companies that sell consumer goods. After all, in good and not-so-good times, we need things like paper towels and diapers. And as our nation's population increases, it seems that we will consume more of these necessities.

IN PICTURES: 8 Tips For Starting Your Own Business

With that in mind, let's look at a couple of the big names in consumer goods and their recent earnings releases.

Procter & Gamble Warrants Attention
Procter & Gamble (NYSE: PG) comes to mind because this past week, the Ohio-based company that sells popular items ranging from Pringles to Vicks released its third-quarter earnings. The company's core earnings came in at 89 cents. That was markedly better than the 82 cents analysts were expecting. Of course, the company isn't entirely new to upside surprises, as it beat expectations in all of the last four quarters. This trend of sorts is likely to grab the attention of retail and institutional investors alike.

Drilling a bit deeper, the company trades at 15.1 times this year's estimate. That is attractive with a capital "A" given its potential for future growth. As a bonus, the company pays a handsome dividend. In fact, in April its board approved a dividend increase, which might be read as a sign of confidence.

Colgate Scrubs Out A Good Quarter
Colgate-Palmolive (NYSE: CL) came out with its Q1 release this past Thursday. The company, known for products like deodorant and bar soap, earned $1.21 per share excluding a charge, and that was 2 cents more than analysts were calling for. Colgate, like P&G mentioned above, has consistently topped expectations quarter in and quarter out, and because of that alone it deserves attention.

However, there is more. The company is expected to generate $4.86 a share in earnings this year and $5.35 per share in 2011. If achieved, that would be attractive growth, especially for a company of its maturity and size. In sum, Colgate may lack a truly sexy story, but its vast product line and consistency on the earnings front make up for that.

Another Way To Play Future Demand For Consumer Products
Investors can make a wager on a company like Colgate or P&G, both mentioned above, or they can hypothetically purchase stock in retailers that sell quantities of valuable consumer products. Target (NYSE: TGT) and Wal-Mart (NYSE: WMT) are two examples of companies that sell large amounts of things like paper towels, tissues, hygiene products, hair care and toothpaste as well as other products. And their footprints and ability to grow make them attractive to investors. Target and Wal-Mart can presently be bought for 15.2 times and 13.5 times this year's estimates, respectively.

Bottom Line
Tech companies are by nature sexy. But short- and long-term consumer product companies look like an attractive play and therefore shouldn't be overlooked. Of the above, Procter & Gamble is my favorite. Not only is it coming off a strong quarter, but it also has so many brands under its wing and such a terrific earnings potential over the long run, it is hard to ignore. (For more stock analysis, take a look at Big Dividends in Technology.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

comments powered by Disqus

Trading Center