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Is P&G on the Rebound?

Shares of Procter & Gamble (PG) gained 4.2% on Sept. 10 after the consumer-products giant announced it expects product sales, not including the impact of acquisitions and foreign exchange, to grow 1% to 4% next quarter. That represents an abrupt turnaround for P&G, which has suffered for much of the year. (The company said it still expects sales to fall as much as 3% during the current quarter.) P&G's sales are being driven by price cuts as well as marketing outlays that could exceed $500 million by next summer. In Turkey, for instance, the company cut prices to reflect the fall in the Turkish lira—and regained the eight percentage points of market share it lost earlier in 2009.

At 55.03, Procter & Gamble shares remain cheap even after that 4.2% rise, says UBS (UBS) analyst Nik Modi. The stock is down 11% so far this year, compared with a 16.5% gain by the Standard & Poor's 500-stock index. Modi expects that situation to reverse—if P&G can "deliver on its promise. And I'm pretty confident they can," he says. The stock should trade around 70 within the next 12 months, Modi says.

The Right Direction

More and more smartphones offer a navigation application that gives a driver, cycler, or walker turn-by-turn directions. Bad news for dedicated navigation device makers like Garmin (GRMN) and TomTom? Not necessarily.

On Sept. 10, Bank of America Merrill Lynch (BAC) analyst Vivek Arya upgraded Garmin from "underperform" to "buy" and set a target price of 45. On Sept. 14, the company's stock closed at 36.81. Arya cites, among other things, overwrought concerns about consumers adding "nav apps" to smartphones rather than buying Garmin's device. But such issues as screen size, battery life, and the cost of the apps seem to be working against their use in smartphones. Another positive for Garmin is dealers' need to restock inventory in the wake of the cash-for-clunkers program.

The company is also benefiting from an expanding market in aviation, marine, and fitness/bicycling—segments that account for about 30% of Garmin's sales and some 45% of its operational earnings. On Sept. 11, Goldman Sachs (GS) added Garmin's Dutch rival, TomTom, to its "conviction-buy list" of stocks it expects to outperform the Standard & Poor's 500-stock index, with an 18-month price target of 17 euros, up from 10 euros.

Bolsa Boom

Mexico's Bolsa Index hit a 15-month high on Sept. 15. Despite the government's budget woes and an economy forecast to shrink 7.7% in 2009—the biggest decline since the 1930s—"the worst appears to be over," says Citigroup (C) analyst Eduardo Estrada Lopez.

That's good news for Wal-Mart de México (WMMVY), whose shares make up about 14% of the index. Lopez expects the stock to rise about 10%, to 54 pesos, as it gains market share. HSBC (HSBC) analyst Richard Dineen is bullish on wireless operator América Móvil (AMX), which makes up 22% of the Bolsa. He has a target of 40 pesos; the stock trades at 31.

The fund T. Rowe Price Latin America (PRLAX) has more than 20% in Mexican stocks. It's up more than 100% since March, but Morningstar (MORN) analyst William Samuel Rocco says it "has a longer-term focus" than rivals. Still, the fund is risky: It lost 56% in 2008.


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