When considering buying a Christmas gift for a loved one, my first question is not “Is this something I would want?”
I learned this at an earlier age when my mum unwrapped a DVD copy of Kill Bill. She feigned enthusiasm until the film concluded, before delivering the verdict “What a load of rubbish.” I probably should’ve bought a hair styler.
But if I were to gift someone shares this Christmas, the best question I could ask belies the usual logic. “Would I want to own this?” is the best question I could ask.
Unilever (LSE: ULVR) (NYSE: UL.US) is a company I’d be glad to consider as an investment, say, for a family member. It is a business that I’d likely be happy to buy and hold myself for 10 years or more. Its products such as Dove, Persil, Sure and Wall’s fulfil persistent needs to consumers around the globe. They are repeat purchases which become more valuable over time.
I’m encouraged by Unilever’s 15% operating margins – indicative that customers will pay a little extra for its brands. The company trades for around 16 times operating cash flow, and while this is not cheap, I’d hardly call it expensive for a company of Unilever’s quality.
I’m expecting Unilever’s margins to improve if, as expected, its brands continue to command higher prices in fast-growing markets such as India and Brazil. Unilever is a company that could underpin either a portfolio of your own or a family member’s for years to come.
