What’s Telling Me to Buy Unilever Plc Today

Royston Wild considers the investment case for Unilever plc (LON: ULVR).

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Today, I am looking at Unilever (LSE: ULVR) (NYSE: UL.US), and tallying up whether to pick the household goods giant up off the shelf.

Exciting new territories continue to lead the way

In previous articles I have flagged up Unilever’s flourishing strength in rich developing markets, and although growth in these regions have slowed somewhat, this has to be viewed with some perspective as previous expansion took off at breakneck speed.

The company announced in July that underlying sales in emerging markets advanced 10.3% in the first six months of 2013, a result that pushed group sales 5% higher. By comparison, sales from traditional markets slipped 1.3%.

The firm commented that growth is slowing in emerging markets, as macro-economic headwinds influence consumer behaviour”, however, with a multitude of local issues in these regions affecting demand.

Still, the company’s ability to continue punching double-digit growth in developing regions is no mean feat. And I fully expect the firm’s heavy exposure to these lucrative geographies — emerging markets now account for more than 57% of total turnover — to continue to grow.

New product launches in January-June included Cif and Domestos in Brazil, and its Sunlight anti-bacterial range of laundry and dish-washing products in India and Indonesia. The firm also successfully raised its stake in Indian fast-moving consumer goods giant Hindustan Unilever to 67% in July.

Stunning earnings reliability set to continue rolling

Unilever’s has a bulging stable of terrific pan-global brands, which allows it to maintain enviable pricing power and boost its push into developing regions. The firm’s household products and personal care portfolio is the fastest growing on the planet. And its less-profitable food division also saw performance improve during the second quarter, although the possibility of further divestments here could help to boost earnings.

Broker Investec reckons that Unilever’s earnings per share will continue growing this year and next — expansion of 4% and 7% is pencilled in for 2013 and 2014 respectively. The company has carved out a reputation as a dependable deliver of earnings growth in recent years, and I can see no reason for this to change any time soon.

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Unilever’s shares have been turbulent in recent months, although the firm has regained almost 6% since June’s multi-month troughs. And Investec reckons that further gains can be punched, having attached a 3,000p price target to the stock.

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> Royston does not own shares in any company mentioned in this article. The Motley Fool has recommended shares in Unilever.

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.

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