This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Finding the Next Procter & Gamble

NEW YORK ( TheStreet) -- In the category of "Things That Go Bump in the Night," I'm beginning to sense an opportunistic shift happening in the stock market right now under our noses and under the radar".

There's been plenty of media hype about the possibility of interest rates rising as investors continue to dump bonds and buy stocks with good dividends. That's driven companies like Procter & Gamble (PG) up to new 52-week highs.

Investors have been chasing yield and that's partly why the blue-chip stock dividend payers including PG and Johnson & Johnson (JNJ) have been driven upward to unsustainably high price levels.

The Federal Reserve and Chairman Ben Bernanke will factor into this equation beginning Wednesday. That's when he'll make yet another policy announcement after the Federal Open Market Committee meeting.

The wording of this announcement might trigger a short-term stock market correction, especially if the Fed injects any uncertainty about interest rates.

The Fed told investors repeatedly it'll keep the federal funds rate at 0% until the U.S. unemployment rates falls to 6.5% from its current level at 7.7%. Even a hint of waffling on that promise could cause a selloff in what I call the "Dividend Dynasty Stocks," or DDS. If you're an investor you probably own some of them.

So I'm suggesting the possibility of a temporary sector rotation out of the high-flying DDS-type equities and into sectors where stock prices haven't gone ballistic yet. On his TV show "Mad Money", Jim Cramer referred to this possibility as well and identified some sectors that may benefit from such a sector shift.

Jim Cramer and Stephanie Link actively manage a real money portfolio for his charitable trust --enjoy advance notice of every trade, full access to the portfolio, and deep coverage of the latest economic events and market movements.

Jim mentioned the financials, the insurance companies and even the transportation sector. It may be true the next PG-style investment opportunity may be in a laggard such as Prudential Financial (PRU - Get Report). PRU provides a range of insurance, investment management and other financial products and services to both individual and institutional customers in the United States and internationally. (By the way, PRU wasn't on Jim's list during his telecast.)

PRU is selling at a little less than seven times its forward (one-year) expected earnings and has a price-to-earnings-to-growth (PEG) ratio of only 0.58, which usually indicates undervaluation. If an overall stock market correction brought PRU's stock price down to its March 1, 2013, intraday low of $54.29, the dividend yield-to-price would rise to nearly 3%.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
KLAC $69.95 -1.20%
MSFT $49.88 -0.04%
PRU $77.65 -0.37%
AAPL $93.75 -1.10%
FB $117.53 0.69%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs