Bogumil Baranowski of Sicart Associates presented his in-depth investment thesis on Procter & Gamble (NYSE: PG) at Wide-Moat Investing Summit 2018.

Thesis summary:

Procter & Gamble is a prime example of a lasting, wide-moat business. It is one of the world’s largest consumer and home product companies in the world. It has a strong portfolio of global brands available in 180 countries (sales are 2/3 developed markets, 1/3 developing). PG is a quality, stable, and growing business with high margins and returns, a strong balance sheet, and a 62-year history of dividend increases.

PG recently traded at 17x P/E, 12x EV/EBITDA, and a dividend yield of 3.8%. Bogumil likes the shares because they are down, cheap, and out-of-favor, while the company is possibly the most focused it has been in recent history. After a major restructuring PG has fewer brands, a leaner supply chain, and improved marketing. Management sees further cost savings going forward and meaningful return of capital.

Activist investor Nelson Peltz took a seat on the board, which may further accelerate change.

The stock is out-of-favor due to weaker organic sales growth, margin pressures due to elevated costs, and concerns about innovation. PG is well-positioned to get back on track and deliver respectable results over the next five years.

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About the instructor:

Bogumil Baranowski has a Master’s degree in Finance and Strategy from Institut d’Etudes Politiques de Paris (Sciences Po), and a Master’s in Finance and Banking from Warsaw School of Economics. He has over 13 years of investment experience. Before joining Sicart Associates, LLC, he worked at Tocqueville Asset Management L.P. as a portfolio manager and senior equity analyst. He is the author of Outsmarting the Crowd – A Value Investor’s Guide to Starting, Building and Keeping a Family Fortune (2015). He is a TEDx Speaker, an Executive Board member of one of the oldest and most advanced Toastmasters International clubs in New York City, and an Instructor at MOI Global (The Community of Intelligent Investors). His articles regularly appear on Seeking Alpha.