Even with the COVID 19 pandemic, Procter & Gamble’s business is doing well
Total revenues increased 8.5% year-over-year in Q1 and GAAP EPS was USD 1.63
If the price jumps above $140, the next target could be $145 or even $150
The Procter & Gamble (NYSE: PG) price has gone from $111 to $145 in less than six months and the current price is around $137. Procter & Gamble has found strong support above $130 but the price is still unable to break through the $150 resistance.
Fundamental analysis: Procter & Gamble has raised its outlook for FY2021 for organic revenue growth
Even with the COVID 19 pandemic, Procter & Gamble’s business is doing well and the company is expected to see an increase in sales for the next fiscal year. Procter & Gamble recently released its first quarter results, total revenue increased 8.5% year-over-year and GAAP earnings per share for the first quarter were $1.63.
It is also important to note that the company has raised its outlook for organic revenue growth for fiscal 2021 from a range of +2% to +4% to a range of +4% to +5%. The Company declared a quarterly dividend of $0.7907 per share, consistent with the previous one.
Nevertheless, I believe that Procter & Gamble is currently overvalued and that the main drivers of Procter & Gamble’s recent capital growth are external. With a market capitalization of $353B, this stock is a bit expensive and represents an opportunity only for short-term traders.
There are some obvious risks in trading this stock at this time, but the stability and size of Procter & Gamble will always attract potential investors and traders. Investor attention is also focused on the negotiations for the U.S. stimulus package and the upcoming presidential election.
The U.S. presidential election will be held on November 3, and according to the polls, U.S. President Trump’s rival, Joe Biden, is leading.
Technical analysis: Bulls focus on breaking through the $150 resistance level
Data source: tradingview.com
If we take a look at the chart above (one year period), we can see that the price of this stock has risen from $94 to $145. As long as the price is above this trend line and $130, this stock remains in the “buy” zone and there is no sign of a trend reversal.
If Procter & Gamble’s price falls to the trend line and we get a “bullish” confirmation candle, this would be a very good entry point for short-term traders trading “stop loss” and “take profit” orders. The trend line represents a very strong support level, if the price breaks through this trend line, it would be a strong “sell” signal and we have an open path to $130.
If the price jumps above $140, it would be a signal to buy Procter & Gamble stock and we have an open path to $145. A rise above $150 supports the continuation of the uptrend and the next price target could be around $160.
The fund managers have a buy recommendation for Procter & Gamble shares, and even with the COVID 19 pandemic, Procter & Gamble’s business is doing well. Long positions in the stock allow for an annual dividend payout of $3.16, which gives us a dividend yield of 2.22% at current levels. Procter & Gamble’s valuation is currently at an almost 30-year high, and as long as the share price remains above $130, the stock is in the “buy” zone.