Over roughly the past four months a key level of support has formed in the chart of Procter & Gamble (PG). If this level is broken, a breakdown could occur.
PG is one of the world’s largest consumer product manufacturers. It markets its products in more than 180 countries through a variety of store types including big box stores, grocery stores, drug stores, and through e-commerce platforms. Top brands include Tide laundry detergent, Charmin toilet paper, Pantene shampoo, and Pampers diapers.
The company has performed well this year due increased demand for essential items during the pandemic. PG had a strong 2021 first quarter with earnings up 19% year over year and revenue up 9%. The company should continue these gains as shifting consumer habits, such as working from home, will result in more growth for the foreseeable future.
PG had $13.4 billion in cash as of the most recent quarter. This was up from $6.3 billion one year ago, but down from $16.2 billion in the previous quarter. Long-term debt was $23.9 billion and the company’s current ratio was a bit low at 0.9.
The company has a stable history of revenue growth, up an average of 3.6% over the last three years. Earnings growth is up an average of 12.4% over the last five years and is expected to grow 6.5% next year. The firm is also quite profitable with a net margin of 18.9%.
The stock has shown moderately bullish long-term momentum, but bearish near-term momentum. This has led to a “Buy” rating in our POWR Ratings service.
Take a look at the 1-year chart of PG below with added notations:
Chart of PG provided by TradingView
PG has formed a major level of support at $135 (green) over the past few months. The stock has repeatedly rallied off the mark, and now that it has fallen back down to the $135 level again, another bounce could follow. However, if the $135 support were to break, lower prices should follow for PG.
A trader could enter a short position if PG breaks the $135 support level with the expectation of a breakdown.
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PG shares were trading at $135.51 per share on Friday morning, down $0.00 (0.00%). Year-to-date, PG has gained 11.17%, versus a 14.99% rise in the benchmark S&P 500 index during the same period.
About the Author: Christian Tharp, CMT
Christian is an expert stock market coach at the Adam Mesh Trading Group who has mentored more than 4,000 traders and investors. He is a professional technical analyst that is a certified Chartered Market Technician (CMT), which is a designation awarded by the CMT Association. Christian is also the author of the daily online newsletter Todays Big Stock. More...
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