According to CNBC, Jim Cramer has declared Procter & Gamble his “favorite stock,” bucking the trend of favoring big tech names. He points to P&G’s price-to-earnings ratio of just over 20 times next year’s estimates as one of the cheapest valuations he’s seen for the Tide and Gillette maker, whose stock is down 10.5% year-to-date. A major catalyst is the incoming CEO, company veteran Shailesh Jejurikar, who takes over in January and is expected to initiate a restructuring plan. However, management has already warned that the upcoming quarter will be the “softest growth quarter” of fiscal 2026, projecting organic sales growth between flat and up 4% for the full year. The company is a Dividend Aristocrat, having raised its payout for 69 consecutive years, yielding about 2.9% currently, and plans $5 billion in share buybacks for fiscal 2026. Cramer’s Investing Club has a $165 price target on the stock.
Cramer’s Contrarian Bet
Here’s the thing: Cramer is making a classic “be greedy when others are fearful” play. The entire consumer packaged goods sector is out of favor. Inflation has pinched wallets, and people might be trading down from Tide to a cheaper brand. So the stock is cheap for a reason. But Cramer’s bet isn’t on a sudden consumer frenzy. It’s on corporate execution. He’s banking on a new CEO coming in to “clean house” and streamline a massive, sometimes sluggish, bureaucracy. That’s a real catalyst. If Jejurikar can actually accelerate sales growth where his predecessor couldn’t, the stock could re-rate higher. And let’s be honest, in a market obsessed with AI and semiconductors, owning a boring, profitable company that makes stuff people need every day is a form of diversification. It’s a defensive play dressed up as an offensive one.
The Real Risks Are In The Details
But we have to talk about the warnings. Management already told investors they will miss the next quarter. That’s not speculation; it’s a guidedown. Cramer admits things might get worse before they get better, and the stock might “do nothing” if the weak scenario plays out. His entire thesis hinges on the upcoming quarter not being as bad as feared. That’s a low bar, but it’s still a gamble. What if U.S. consumer volatility is worse than they’ve factored in? What if the restructuring under the new CEO causes disruption instead of growth? A 69-year dividend streak is impressive, but it’s a history lesson, not a future guarantee. The near-term path is genuinely murky, and investors buying now have to be prepared for more sideways or even downward movement before any potential payoff.
The Waiting Game
So basically, you’re being paid a nearly 3% dividend to wait. That’s the pitch. In a world of zero-yield tech stocks, that income matters. The buybacks provide a floor for the stock price. And if macro conditions like lower interest rates and oil prices finally give consumers more breathing room, P&G could see a natural lift. It’s a de-risking story. But is it a growth story? That’s the real question. Flat to 4% organic sales growth isn’t exactly thrilling. This isn’t a stock you buy for explosive gains. You buy it for stability, income, and a hope that a new CEO can wring more efficiency out of a giant. In a “whacky market,” as Cramer calls it, maybe that’s enough. But don’t confuse a safe harbor with a speedboat.
