Burberry Group plc, A.G. Barr plc and Unilever plc: Unmissable Bargains?

Is now the time to load up on Unilever plc (LON:ULVR), Burberry Group plc (LON:BRBY) and A.G. Barr plc (LON:BAG)?

| 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.

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.

The FTSE 100 is well below 6,000, as I write — down some 16% from its April high of just over 7,100.

Dramatic falls in many mining and oil stocks are getting a lot of attention, and naturally twitching the antennae of bargain hunters. But the market correction is also presenting an opportunity to buy into some steadier, defensive businesses at a discount — a big discount in some cases.

In the consumer goods sector, brands powerhouses Burberry (LSE: BRBY), AG Barr (LSE: BAG) and Unilever (LSE: ULVR) could be unmissable bargains.


Slowing growth in China hasn’t only hit stocks in the natural resources sector. Luxury fashion house Burberry is also suffering from the China factor.

A great driver of Burberry’s growth has been the successful exporting of iconic British style around the world. Around two-fifths of total group revenue comes from the Asia-Pacific region. In the company’s most recent trading update (for the three months to 30 June), management reported high single-digit or double-digit comparable sales growth in most regions, but Asia Pacific saw a low single-digit decline. Modest growth was achieved in Mainland China, but in Hong Kong’s “challenging luxury market” comparable sales fell by a double-digit percentage.

At 1,320p, Burberry’s shares are down 31% from their 52-week high. Fashion can be somewhat fickle, but Burberry’s defensive qualities come from being purveyors of timeless style. No earnings headway is forecast for the current year, but growth is expected to resume at 10% next year. The fall in the shares looks overdone to me and I consider Burberry to be an attractive buy at 15.5 times next year’s forecast earnings.

AG Barr

AG Barr may be a much smaller company than Burberry (a market cap of £600m versus £6,000m), and less geographically diverse (just 3% of revenue comes from outside the UK), but its business is inherently more defensive than that of the fashion house. Barr is a soft drinks maker, its flagship brand being Irn-Bru.

In its half-year results, released last week, the company reported an adverse impact on performance from disappointing weather and challenging market conditions. As with Burberry, little earnings headway is expected this current year, but growth is forecast to resume at a decent clip (7% in Barr’s case) next year.

At 527p, Barr’s shares are 23% down from their 52-week high. Again, I see the fall as overdone. A rating of 17.3 times next year’s forecast earnings looks attractive for a well-run, defensive business, which the market has rated markedly higher when in less pessimistic mood than today.


Unilever is a defensive business par excellence. With a market cap of £78bn it towers above Burberry and Barr, while its incredible geographical diversification and sheer number of top food and household brands give it everything you want from a defensive business.

It is perhaps not surprising that a company with the impeccable, all-round defensive qualities of Unilever hasn’t fallen as far as Burberry and Barr during the market sell-off. Unilever’s shares, at 2,587p, are down a relatively modest 14% from their 52-week high.

But a 14% discount, and a rating of 18.5 times next year’s forecast earnings, is not to be sniffed at for an outstanding business, delivering reliable long-term earnings growth. As such, I would also rate Unilever as a worthy buy at current levels.

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.

G A Chester has no position in any shares mentioned. The Motley Fool UK owns shares in Unilever and has recommended Burberry. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

2 ways to make money from a stock market crash

This writer's not spending time trying to guess when the next stock market crash will be. Instead, he's getting ready…

Read more »

Concept of two young professional men looking at a screen in a technological data centre
Investing Articles

How this rocketing FTSE 250 stock is tapping into the billionaire-making AI revolution

As the AI revolution mints new billionaires, this high-flying FTSE 250 company has been making its shareholders wealthier too.

Read more »

Investing For Beginners

4 actionable stock market investing habits that can boost my profits

Jon Smith looks at the stock market and explains how he picks the right shares to buy, running through a…

Read more »

Investing Articles

The Standard Chartered share price leaps on FY dividend and buyback news. Time to buy?

An 8% jump for a UK-listed bank on 2023 results? That's what just happened to the Standard Chartered share price.…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Can Lloyds shares get any cheaper?

Lloyds shares have fallen further following the release of the bank's 2023 results. This Fool senses now is a time…

Read more »

Aerial shot showing an aircraft shadow flying over an idyllic beach
Investing Articles

£7,000 of money to spare? Here’s how I’d aim to turn that into £1,000 in annual extra income

Christopher Ruane explains how he would aim to generate a four figure income to cushion his future, all with dividend…

Read more »

British union jack flag and Parliament house at city of Westminster in the background
Investing Articles

Is this stellar dividend growth stock the only no-brainer buy on the entire FTSE 100?

Picking shares requires careful thought and analysis, but this FTSE 100 growth stock appears to be pressing all the right…

Read more »

Investing Articles

I bought 422 Glencore shares in July and 232 in September. Here’s what they’re worth now

Glencore shares have had a rough ride leaving Harvey Jones out of pocket. Should he cut his losses or average…

Read more »