Is There Still Time To Buy Unilever plc?

Can Unilever plc (LON: ULVR) move higher, or are the company’s shares overvalued?

| 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.

Right now I’m looking at some of the most popular companies in the FTSE 100 and wider market to try and establish if there is still time for investors to buy in.

Today I’m looking at Unilever (LSE: ULVR) (NYSE: UL.US) to ascertain if its share price has the potential to push higher. 

Current market sentiment
unilever

The best place to start assessing whether or not Unilever’s share price has the potential to push higher, is to take a look at the market’s current opinion towards the company.

At present, it would appear that Unilever’s shares are sought after, as investors seek solace in the firm’s defensive nature while the wider market wobbles.

Indeed, so far this year Unilever has outperformed the wider FTSE 100 by 6% and it looks as if this performance is set to continue as the company is expected to release an upbeat set of first quarter results later this week.

Upcoming catalysts

As mentioned above, the main catalyst for Unilever’s shares going forward is going to be the release of the company’s first-quarter results. 

Unilever caused City analysts to rethink their expectations at the end of 2013, after the group reported surprise underlying sales growth of 4.1% during the last quarter of the year, due to a strong performance within emerging markets.

However, since the end of 2013 Unilever has restructured its business, disposing of low-margin low-growth brands such as, Peperami, Skippy peanut butter, Wish-Bone salad dressing and Ragú pasta sauce.

Unfortunately, the disposal of these brands is likely to hit sales, although Unilever’s remaining portfolio of products is still attractive and the company’s profit margin should get a boost from the disposal of these low margin brands.

What’s more, there have been some rumors around the City that Unilever could unveil a £4 billion euro share buyback plan alongside first quarter results. 

Valuation

As you would expect, due to Unilever’s defensive nature investors are prepared to pay a premium for the company’s shares. In particular, Unilever currently trades at forward P/E of 19.7 and offers a dividend yield of 3.5%.

However, while this valuation may seem a bit rich for some, it is actually similar to that of Unliever’s international peers.

For example, Unilever’s larger peer, Procter & Gamble currently trades at a forward P/E of 18 and smaller international peer, Colgate-Palmolive trades at a forward P/E of 20.  

Foolish summary

So overall, I feel that there is still time to buy 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.

Rupert does not own any share mentioned within this article. The Motley Fool owns shares in Unilever. 

More on Investing Articles

Investing Articles

2 mouthwatering FTSE growth stocks I’d buy and hold for 10 years

Growth stocks purchased today could be the gateway to many years of capital growth and returns. Here are two picks…

Read more »

Investing Articles

Can the IAG share price really be as dirt cheap as it looks?

While most shares have recovered since the Covid days, the IAG share price is staying stuck to rock bottom. Surely…

Read more »

Investing Articles

BAE Systems shares are flying! Have I missed the boat?

Sumayya Mansoor looks into whether or not BAE Systems shares are still a good buy for her portfolio after the…

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

1 heavyweight FTSE 100 share I’d buy as London retakes its crown

Some Footsie firms are extremely large, but that doesn't mean they couldn't get even bigger. Here's one such FTSE 100…

Read more »

Investing Articles

I’d buy 5,127 National Grid shares to generate £250 of monthly passive income

With a dividend yield of 6.5%, Muhammad Cheema takes a look at how National Grid shares can generate a healthy…

Read more »

Investing Articles

The FTSE 100’s newest member looks like a no-brainer to me!

This Fool explains why she sees the newest member of the FTSE 100 as a great opportunity after its recent…

Read more »

Investing Articles

Empty Stocks and Shares ISA? Here’s how I’d start earning a second income from scratch

Like the thought of earning extra cash tax free? Our writer explains what he'd do to begin earning passive income…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

No savings at 25? I’d start by investing £3k in these 3 red-hot FTSE 100 shares

Harvey Jones thinks these three FTSE 100 stocks would be a great way to kickstart a portfolio of UK shares.…

Read more »