Stock of the week: Unilever
Unilever manufactures a wide range of consumer goods, including food, detergents, fragrances, home and personal care products.
Its 400 brands include many well-known favourites such as Dove, Flora, Ben & Jerry’s, Knorr and PG Tips. So why is the company our share tip of the week this week? Well we believe it is a safe and steady option in the current volatile market. It is well managed and it has been improving its performance and reputation. Moreover, the share price has had a good recovery of late, in fact it has outperformed the market over the past year and we think there are good long term growth opportunities for this stock.
For some time Unilever has been trying to grow its sales in the vibrant emerging markets where it believes the expanding middle classes will provide strong demand for its global brands for many years. That desire has been frustrated of late by a slowdown in growth in these regions, but investors should note that there are signs that the situation may now be changing.
In its full year results, Unilever reported turnover up 10% to €53.3bn with sales boosted by the performance of premium ice creams and beauty products towards the end of the year. The CEO did warn that market conditions for the remainder of 2016 may be volatile, but it is looking to cut €1bn from its costs by 2018.
We upgraded Unilever to a ‘buy’ almost a year ago and we maintain this recommendation for lower risk investors, with a balanced portfolio. This is a company with a diverse portfolio of global brands and a healthy dividend, which is expected to rise well ahead of inflation over the next couple of years.