Why Reckitt Benckiser Group Plc Is One Of My Favourite Stocks

Even though there are hundreds of UK-listed stocks to choose from, Reckitt Benckiser Group Plc (LON: RB) remains one of my favourites.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

As every Fool knows, it is crucial to keep emotions out of investment decisions. The two simply do not mix and, as I have found to my cost in the past, investing in a company you like or whose good/service you gain enjoyment from is not a sound investment strategy.

Indeed, when I talk about Reckitt Benckiser (LSE: RB) (NASDAQOTH: RBGPY.US) being one of my favourite stocks, I am speaking with regard to its attributes as a company and an investment, as well as the potential it has to grow over the long-term.

Of course, the company has excellent prospects over the shorter term, too. CEO Rakesh Kapoor recently announced that he expected around half of the company’s revenue to be derived from China by 2015. This is a year earlier than planned and shows that, as the Chinese population becomes more affluent, they are demanding more consumer staples and medicines. Both of which are core areas for Reckitt Benckiser.

Certainly, many of us in the UK would view some of the company’s products as being basic and not particularly glamorous or exciting. For instance, Gaviscon, Calgon, Finish and Nurofen are not exactly products that set the pulse racing.

However, they improve the quality of people’s lives, whether through convenience or improved health. Furthermore, established brands in the developed world are proving popular in emerging markets due to their quality and reliability.

Therefore, there is the potential for Reckitt Benckiser to substantially increase sales in a wide range of developing nations, as people become more affluent and seek basic, reliable and high-quality medicines and consumer staples. The key difference between Reckitt Benckiser and many of its competitors in the consumer goods sector is that its goods are considered near-necessities and, as such, have wider accessibility and lower price points.

Shares currently trade on a price-to-earnings ratio of 19.7, which is a premium to both the consumer goods industry group (17.5) and the FTSE 100 (12.9). However, with near-limitless potential, I believe the premium is actually quite reasonable and Reckitt Benckiser is a company I will be looking to buy and hold for a long time.

Of course, you may be looking for other ideas in the FTSE 100 and, if you are, I would recommend this exclusive wealth report which reviews five particularly attractive possibilities.

All five blue chips offer a mix of robust prospects, illustrious histories and dependable dividends, and have just been declared by The Motley Fool as “5 Shares You Can Retire On“.

Simply click here for the report — it’s completely free!

> Peter does not own shares in Reckitt Benckiser.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

More on Investing Articles

ISA Individual Savings Account
Investing Articles

Thinking of starting a Stocks and Shares ISA this April? Avoid these 4 mistakes!

A Stocks and Shares ISA can be a way for an investor to try and build wealth over the long…

Read more »

ISA coins
Investing Articles

Here’s how to build a £100k ISA starting with £5k today

Increase an ISA's value 20-fold? It need not just be the stuff of dreams, according to this writer -- though…

Read more »

A senior man and his wife holding hands walking up a hill on a footpath looking away from the camera at the view. The fishing village of Polperro is behind them.
Investing Articles

6.9% yield! I just added this share to my SIPP

In a turbulent stock market, our writer has been hunting for bargains to add to his SIPP. After a 31%…

Read more »

piggy bank, searching with binoculars
Investing Articles

With Rolls-Royce shares moving up again, is a £10 price target back on the horizon?

Rolls-Royce shares wobbled when President Trump dropped his tariff bombshell on us. But three weeks is a short time in…

Read more »

UK financial background: share prices and stock graph overlaid on an image of the Union Jack
Investing Articles

2 UK stocks to consider buying as the market sell-off continues

Stephen Wright thinks investors looking for opportunities might be able to take advantage of short-term weakness in some UK stocks.

Read more »

Closeup of "interest rates" text in a newspaper
Investing Articles

1 stock for passive income investors to consider buying before the Bank of England cuts interest rates

With the Bank of England’s Monetary Policy Committee set to meet in May, passive income investors should think about how…

Read more »

Tesla building with tesla logo and two teslas in front
Investing Articles

Is Tesla about to become the ultimate passive income machine?

Our writer discusses whether Tesla stock might be worth him buying, just in case the EV giant enables passive income…

Read more »

Rolls-Royce's Pearl 10X engine series
Investing Articles

Will the Rolls-Royce share price collapse? Here’s what the charts say

The Rolls-Royce share price has pulled back following the announcement of Donald Trump’s trade policy, but supportive trends remain.

Read more »