Rinse And Repeat

Image source: Christian Lambert - Unsplash

What's going on?

Procter & Gamble (P&G) reported better-than-expected quarterly results late last week, as everyone finally let their hair down after a dry, dull, lifeless year.

What does this mean?

Not to rain on P&Gs parade, but investors saw the companys better-than-expected quarterly sales and profit coming a mile off after strong updates from fellow consumer staples Coke and Pepsi earlier in the month. Thats probably why the companys stock initially rose just 1% on Friday, even though analysts estimates hadnt quite caught up yet. Its healthcare segment did especially well: customers have been stocking up on its premium personal care products, presumably to make sure they were all spruced up when they met real people in real places again.

Why should I care?

Zooming in: Price hikes are in the offing.

P&G did point out that its costs had been rising, and the company said it was planning to hike the prices of brands like Tide, Charmin, and Pampers (tweet this). Its hoping loyal customers will stick to the household names they know and love as prices rise, rather than switch to cheaper private label brands. Its not alone either: rivals Kimberly-Clark and Unilever are essentially making the same bet.

For you personally: Have your cake and eat it too.

Investors have generally been expecting muted updates from economically resilient defensive companies like consumer staples, and blockbuster ones from economically sensitive cyclical firms. But youd probably be better off investing across the market rather than trying to buy into sectors at exactly the right time, in case that rule of thumb ends up working against the companies. Just look at Caterpillar: the cyclical construction equipment-makers shares fell on Friday despite its stronger-than-expected earnings.

Originally posted as part of the Finimize daily email.

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