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MrShihTzu said:

PG scores high on the mindshare kind of issues, but the combination of the debt level and the relatively slow growth (both past and estimated for the future) lead me to believe that there are other better candidates.

Do you know why PG has so much debt?


Of course, P&G (or any other consumer products business with their market share) will grow relatively slowly, compared to new technology. Their projected growth rate is around 10% per year, which isn't all that shabby. What's KO's projected growth like? I'll bet it isn't all that much higher.

As for their debt, it seems that their competitors (companies such as CL and CLX) have worse cash/debt ratios, implying that it's an industry specific thing. Also, they may not keep much cash around, preferring to return it to the shareholders in the form of dividends. At a market cap of around $120B, a 1% dividend costs over $1B per year. Stash that cash instead, and you'll pay off the long-term debt in about 4 years.

If you're considering consumer companies such as Gillette or Coca-Cola, P&G is in a much better position and has better mindshare. They have the added "advantage" of seeming to offer a choice. You can buy either Tide, Cheer, or Ivory Snow to clean your clothes - PG makes money whichever way you choose. Moreover, you can't easily cut back on laundry detergent the same way you can on soft drinks.

FWIW, they've beaten the S&P in total return over the last 1, 5, 10, and 15 years. That's more than I can say for most mutual funds :-).
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