Gamble on P&G

Judging by the stock’s performance over the last five years (as of recently, a paltry 8 percent cumulative gain), investors are in a sour mood about Procter & Gamble’s (NYSE: PG) business. Some of that pessimism is justified, given that P&G has shed market share in a few key product categories, such as shaving care, during that time. The broader consumer products industry is facing wider challenges, too, including rising costs of raw materials.

Yet P&G is faring better than its peers in some respects. Its industry-leading profitability relies on an impressive selling infrastructure that’s become even more efficient through an aggressive cost-cutting program. It draws strength from its scale and solid retailer relationships.

Consider that even if it downsized to 65 brands, more than a dozen of those generate more than $1 billion in annual sales. As many of P&G’s brands are consumer staples, much of its business has proven to be more resilient during economic downturns.

P&G is aiming for faster sales growth this year and is rolling out significant price increases that could boost earnings. Investors are right to be cautious about that bright outlook, but the stock doesn’t need head-turning revenue figures to outperform rivals from this low point.

The stock is well worth considering for its stability and solid dividend — which recently yielded 3.2 percent and which has been increased for 62 consecutive years.