Use Market Downturns to Buy Quality Consumer Goods Companies

Some stocks tend to hold up well in any market. One area is consumer goods companies. These firms may make humdrum products like prepackaged food, soap, shampoo or toilet paper, but those products never fall out of demand.

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  • When markets turn lower, these companies may sag as well. And that can provide patient, long-term investors with a decent entry point that they otherwise might not have made. Such opportunities are appearing today…

    That’s especially true as companies are being hit with higher costs from inflation, which is finally on the decline. In its most recent quarterly report, Procter & Gamble (PG) reported just such a temporary situation.

    Shares of the consumer goods leader are now down about 10 percent over the past year, just a hair better than the overall stock market. However, the company is holding up well, with flat revenue and earnings performance over the past year.

    Action to take: Investors may like shares for the long haul at or just under current prices. And the stock is a reasonable dividend growth play, with a starting yield of 2.5 percent right now.

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  • For traders, shares are likely to trend higher over time. The July $150 calls, last going for about $5.45, offer mid-double-digit returns in the months ahead. The calls may get a bit cheaper in the coming sessions if stocks continue lower, so look for a chance to buy at an even better price.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.