The Procter & Gamble Company (PG) is a multi-national consumer goods company and a component of the Dow Jones Industrial Average. The consumer staples giant offers beauty, grooming, health care, personal hygiene and infant care products you can find on the shelves of your supermarket. The company is the largest holding of the Consumer Staples Select Sector SPDR Fund (XLP), with a 14.16% weighting in this ETF. P&G stock has an elevated P/E ratio of 21.52 and a favorable dividend yield of 3.15% according to Macrotrends.
Procter & Gamble shares closed Friday, Jan. 18, at $91.42, down 0.5% so far in 2019. The stock is 5.6% below its all-time intraday high of $96.89 set on Dec. 14 but remains in bull market territory at 29.3% above its 2018 low of $70.73 set on May 2. In comparison, XLP closed last week at $52.45, up 3.3% year to date but in correction territory at 11% below its all-time intraday high of $58.95 set on Jan. 29, 2018. The ETF set its 2018 low of $48.33 on Dec. 26 and is 8.5% above this level. I prefer P&G stock over the ETF.
Analysts expect P&G to post earnings per share (EPS) of $1.21 to $1.23 when it reports fourth quarter results before the opening bell on Jan. 23. The company has a string of beating EPS estimates over the past 14 quarters. The consensus is that solid consumer spending on soaps and cleaning materials should continue the string of earnings beats. The uncertainties come from overseas markets and their local economies and weak currencies. Overall, operating expenses are rising, as are the costs related to advertising.
The daily chart for Procter & Gamble
Procter & Gamble stock is trading below its 50-day simple moving average of $92.30 and well above its 200-day simple moving average at $82.78. Based upon the 2018 close, there are two horizontal lines on the chart – my semiannual value level lags at $79.43, with my quarterly pivot at $90.20. Above the chart are my monthly and annual risky levels of $97.73 and $101.52, respectively.
The weekly chart for Procter & Gamble
The weekly chart for Procter & Gamble will end the week negative if the stock is below its five-week modified moving average at $91.63. The stock is above its 200-week simple moving average, or "reversion to the mean," at $83.73. The 12 x 3 x 3 weekly slow stochastic reading declined to 70.16 last week, down from 75.64 on Jan. 11.
Given these charts and analysis, my trading strategy is to buy Procter & Gamble shares on weakness to my quarterly pivot of $90.20 and reduce holdings on strength to my monthly and annual risky levels at $97.73 and $101.52, respectively. My semiannual value level lags at $79.43. (For related reading, see "Who Are Procter & Gamble's Main Competitors?")
Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.