NEW YORK ( TheStreet) -- Procter & Gamble's (PG) sale of Duracell to Warren Buffett's Berkshire Hathaway (BRK.A) is the latest acknowledgement by the consumer products giant that it has gotten way too big to manage.
There's a bull case for the stock in that acknowledgement.
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"I think it makes more sense for Procter & Gamble to focus on less brands. So I think today, the company is more attractive than it was yesterday because they're going to have simply less brands to manage," said Michael Yoshikami, CEO of Destination Wealth Management.
Maybe so, but General Electric (GE) has recognized for years it needs to slim down and -- despite reducing assets from $780 billion at year-end 2009 to $657 billion at the end of 2013 -- the stock has still trailed the S&P 500 for the past five years.
So if you like the simplicity and safety of the consumer products business, with powerful brands that have endured for decades, why not focus on a still-growing company with all those things: Church & Dwight (CHD) ?
The owner of Arm & Hammer products and Trojan condoms has just a $10 billion market cap, compared to $240 billion for P&G, but trades for the roughly same multiple of 25.88 times vs. P&G's 25.18. P&G has a fatter dividend yield of 2.89, versus 1.66 for Church & Dwight, but while Church & Dwight has grown earnings by 76% over the past five years, P&G's earnings have shrunk over the same time period.
There is also the possibility Church & Dwight gets acquired, possibly by Germany's Henkel, according to a Nov. 3 note from Jefferies analyst Kevin Grundy. Or it may look to make more acquisitions, a proven growth path for the company. Grundy estimated a $500 million to $2 billion acquisition for Church & Dwight could add between 5% to 19% to earnings. Plenty of attractive deals could be in the offing for Church & Dwight as bigger conglomerates like P&G continue looking to slim down.
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