Alphabet Joined the Dow and Became a Top Holding in Berkshire Hathaway's Portfolio. But This Stock Could Be an Even Better Buy.

When Alphabet joined the Dow Jones Industrial Average (DJINDICES: ^DJI), the financial press couldn't stop talking about it. And when Warren Buffett's Berkshire Hathaway made it a top portfolio holding, that drumbeat got louder.

There's nothing wrong with owning Alphabet -- it's a great business. But the investors who've built real wealth over decades aren't always the ones chasing the loudest names. Sometimes it's the quiet compounders that win.

Prestige Consumer Healthcare (NYSE: PBH) is not a name you'll hear on CNBC. The company sells over-the-counter healthcare products like Monistat, Dramamine, Clear Eyes, Chloraseptic, and BC Powder. These brands live in medicine cabinets and bathroom drawers across North America. It's boring in the best possible way.

But something big just happened. On June 15, Prestige closed its largest acquisition in company history: the $1.045 billion purchase of the Breathe Right brand and several other OTC labels from Foundation Consumer Healthcare. Breathe Right -- the nasal strip that's been on athletes' faces and on nightstands next to CPAP machines for decades -- just became Prestige's single largest brand.

The Breathe Right play

The deal brings in roughly $200 million in annual revenue and $95 million in earnings before interest, taxes, depreciation, and amortization (EBITDA). It also includes Dimetapp, long the go-to children's cough and cold brand, and Anbesol for oral pain relief. But Breathe Right is the anchor.

What Prestige sees in that brand goes beyond the strip itself. Breathe Right has a foothold in sleep wellness, athletic performance, allergy relief, and congestion.

CEO Ron Lombardi pointed to the company's work with Dramamine as the blueprint. Prestige acquired Dramamine when it was thought of as strictly a motion sickness brand and then expanded it into a broader remedy for everyday nausea and vertigo. The Breathe Right playbook will likely look similar: invest in consumer awareness, broaden the use cases, and build the category.

That model has worked before. Historically, about 64% of Prestige's revenues come from brands that hold the No. 1 position in their categories. The company has spent years assembling a portfolio of what it calls "category synonymous" brands -- names so embedded in consumer memory that the brand name effectively is the category.

Image source: Getty Images.

A quieter GLP-1 angle

One thing that doesn't get enough attention is that Prestige has been threading its portfolio into the GLP-1 conversation. As millions of Americans start using weight-loss medications like Ozempic and Wegovy, they're dealing with side effects that Prestige's brands are built for: nausea, digestive issues, and constipation.

The company has been marketing Dramamine and Fleet toward GLP-1 users seeking relief. That's a smart repositioning of existing assets. And it costs next to nothing compared to launching a new product.

Going international

The Breathe Right deal isn't the only move this year. Prestige also announced an agreement to acquire LaCorium Health, a leading therapeutic skincare brand in Australia. The company already operates in Australia through its Hydralyte and Fess brands, so this deepens an existing footprint rather than planting a flag in unfamiliar territory.

International OTC healthcare represents a real runway. The markets are fragmented, consumer trust in established brands matters, and Prestige's asset-light model travels well.

The risk worth naming

None of this comes free. The Breathe Right deal pushed Prestige's net leverage to roughly 4.0x EBITDA at closing. That's a real debt load, and the company needs its free cash flow to behave.

Management has projected a return below 3.0x leverage by fiscal 2028 -- but that assumes execution holds. Integration stumbles, a softening consumer, or a brand that doesn't respond to investment are all real possibilities here.

Prestige Consumer Healthcare isn't going to light up your portfolio overnight. What it offers is a business with category-leading brands, a repeatable acquisition model, and a fresh runway through Breathe Right. For investors willing to look past the big tech headlines, this OTC brand machine is worth a close look.

Micah Zimmerman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Berkshire Hathaway. The Motley Fool has a disclosure policy.