5 Consumer Stocks Set To Soar: Unilever plc, SABMiller plc, Dixons Carphone PLC, Marks And Spencer Group Plc And McColl’s Retail Group PLC

Buying these 5 consumer stocks looks set to be a shrewd move: Unilever plc (LON: ULVR), SABMiller plc (LON: SAB), Dixons Carphone PLC (LON: DC), Marks And Spencer Group Plc (LON: MKS) and McColl’s Retail Group PLC (LON: MCLS)

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.

While the UK economy is going from strength to strength, the Chinese economy has stalled in recent months. Although it is still growing by over 7% per annum, the ‘soft landing’ that had been rumoured for a number of years has occurred and, as such, it seems likely that the Chinese authorities will continue to cut interest rates as they seek to stimulate economic growth.

This is good news for emerging markets-focused companies such as Unilever (LSE: ULVR) and SABMiller (LSE: SAB) since it could mean that they receive a sales boost. In fact, in its last quarter, SABMiller reported that there had been a pickup in China and, with Unilever relying on the emerging world for around 60% of its total sales, a pickup in the largest emerging market of them all (China) would be great news.

Certainly, both stocks trade on vast premiums to the wider index, but their long term growth rates, stability, product diversity and track records mean that they appear to be well-worth the additional cost. So, while Unilever and SABMiller may appear expensive on price to earnings (P/E) ratios of 21.8 and 22.6 while the FTSE 100 has a P/E ratio of 16, their shares could continue to beat the wider index as they have done in the last year.

UK-Focused

Of course, there are excellent opportunities in the UK-focused consumer sector. For example, the gradual movement of consumers towards the so-called ‘internet of things’ seems to make Dixons Carphone (LSE: DC) a very appealing long term investment. It is expected to increase its earnings by 16% in the current year, and by a further 10% next year and, while it trades on a P/E ratio of 17 (which is higher than that of the FTSE 100), its price to earnings growth (PEG) ratio, which takes into account its strong growth rate, indicates greater appeal since it is just 1.

Similarly, Marks & Spencer (LSE: MKS) is also expected to improve its growth rate in the next two years, with annualised growth of 8% being forecast. This is a marked improvement on previous years and would be the best performance by the retailer since prior to the start of the credit crunch. And, with its shares still having a forward yield of 3.5%, Marks & Spencer offers excellent income potential, too.

However, on this front it is easily beaten by convenience store operator, McColl’s (LSE: MCLS). It currently yields a whopping 5.9% and, with shoppers gradually moving away from large, out-of-town shopping centres and towards smaller, convenience stores, its long term growth profile appears to be very enticing. And, with McColl’s trading on a P/E ratio of just 10.7, it remains dirt cheap and has the potential to post impressive capital gains.

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.

Peter Stephens owns shares in Unilever and Marks & Spencer. The Motley Fool owns shares in Unilever.

More on Investing Articles

Affectionate Asian senior mother and daughter using smartphone together at home, smiling joyfully
Investing Articles

How I’d invest my first £20k ISA to target £4,900 a year from dividend shares

Looking for dividend shares in a new Stocks and Shares ISA, and want diversification too? Here's how I'd go about…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

Yields of up to 7%! I’d consider boosting my income with these FTSE dividend stocks

The London market has some decent-looking dividend stocks right now, and I’m tempted by these two for growing income streams.

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

I’d put £20K in an ISA now to target a £1,900 monthly second income in future!

Christopher Ruane shares why he thinks a long-term approach to investing and careful selection of shares could help him build…

Read more »

Mature couple at the beach
Investing Articles

6 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »