Procter & Gamble stock struggling at $150 resistance

Procter & Gamble stock struggling at $150 resistance
Written by:
Stanko Iliev
17th November, 20:50
Updated: 17th November, 20:51
  • Fund managers still have a buy rating on Procter & Gamble
  • If the price jumps above $145 the next target could be located at $148 or even $150
  • Long positions in the stock provide an annual dividend payout of $3.16

Procter & Gamble (NYSE: PG) price has advanced from $111 above $148 in less than six months and the current price stands around $142. Procter & Gamble stock has found strong support above $135 but the price is still not able to surpass $150 resistance.

Fundamental analysis: Fund managers still have a buy rating on Procter & Gamble

The US stock market hit a record this week thanks to news from pharma company Moderna saying its prospective vaccine was 94.5% effective in preventing the COVID-19. The stocks are also supported with signs of economic recovery in Asia and a jump in oil prices.

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Procter & Gamble shares have advanced this week above $145 and the technical picture implies that the price could advance even more in the upcoming days. Fund managers still have a buy rating on Procter & Gamble stock and even with the COVID-19 pandemic, the business of Procter & Gamble is going well.

“The rising aging population, growing prevalence of skin diseases, shifting interest of consumers toward organic and chemical-free products, and increasing personal care spending are the key factors driving the growth of the beauty and personal care products industry in the U.S. which is set to grow from $81.1B in FY2019 to $128.7B in 2030”, said Prajneesh Kumar from P&S Intelligence.

Procter & Gamble has released recently Q1 earnings results, total revenue has increased by 8.5% Y/Y and Q1 GAAP EPS was $1.63. It is also important to say that the company raised its FY2021 outlook for organic sales growth from a range of +2% to +4% to a range of +4% to +5%.

Long positions in the stock provide 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 a nearly 30-year high and as long the price is above $130 this stock is in the “buy” zone.

Despite this, my opinion is that Procter & Gamble is currently overvalued and the main drivers of Procter & Gamble’s recent capitalization growth are external. With a $353B market capitalization, this stock is a little expensive and represents opportunity only for short-term traders.

Technical analysis: Bulls are focused on breaking the resistance level at $150

When we take a look at the chart below ( one year period), we can see that the price of this stock has advanced from $94 above $148. As long the price is above $130 support this stock remains in the “buy” zone and there is no indication of the trend reversal.

Data source: tradingview.com

On this chart, I marked important resistance and support levels. The important support levels are $135 and $130, $145 and $150 represent the resistance levels.

If the price jumps above $145 it would be a signal to buy this stock and we have the open way to $150. Rising above $150 supports the continuation of the bullish trend for Procter & Gamble shares and the next price target could be located around $155.

On the other side, if the price falls below $130 it would be a strong “sell” signal and we have the open way to $120.

Summary

The US stock market hit a record this week thanks to news from pharma company Moderna saying its prospective vaccine was 94.5% effective in preventing the COVID-19. Procter & Gamble shares have advanced this week above $145 and the technical picture implies that the price could advance even more in the upcoming days. Even with the COVID-19 pandemic, the business of Procter & Gamble is going well and the company will have a rise in revenue for the next fiscal year. Despite this, my opinion is that Procter & Gamble is currently overvalued and with a $353B market capitalization, this stock is a little expensive.

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