I’m backing the Unilever share price to go on a long bull run

The Unilever share price defied last week’s recent sell-off and Harvey Jones reckons it has bags of potential over the longer term too.

| 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.

Image source: Getty Images

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.

The Unilever (LSE: ULVR) share price is finally starting to live up to its potential. It’s jumped an impressive 25.38% in the last six months, and is up 15.27% over the year.

Created with Highcharts 11.4.3Unilever PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Since I hold the shares myself, I’m thrilled. This appears to vindicate my strategy of buying top FTSE 100 companies when they’ve fallen out of favour, in the hope of benefitting when they spring back into life.

Should you invest £1,000 in Abrdn right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Abrdn made the list?

See the 6 stocks

I bought my first Unilever shares in June last year, which promptly dropped and left me facing a double-digit paper loss. Now I wished I’d bought more at the reduced price. I did load up on the stock in May this year, and again in June. Now I’m going to sit back and enjoy the ride.

FTSE 100 recovery play

I’m up 15.14% so far (plus a couple of dividends) and I reckon there’s a lot more to come. I plan to hold the stock for years. Decades even.

The consumer goods giant should do pretty well at every stage of the economic cycle. People still need to clean their homes and wash their hair in a recession. When the economy is doing well, they’ll spend a bit more freely.

Even inflation shouldn’t be a barrier to growth, as Unilever’s array of brands gives it pricing power, allowing it to pass on higher labour and materials costs to customers.

Yet it’s possible to take a good thing too far. Unilever boasts of having hundreds of brands, but in practice its focus has been too wide and vague.

CEO Hein Schumacher has targeted the problem and has been looking to offload lesser brands such as Timotei, Impulse, and Brylcreem, to focus on the winners. Yet his overhaul still has some way to run.

On 26 July, analysts at Berenberg hailed a return to “high-quality earnings growth”, up 3.9% year on `year. Let’s see what the chart says.


Chart by TradingView

Higher earnings have been driven by the long-awaited revival of “volume growth and gross margins”, Berenberg says. The broker hiked its target price for the stock from £49.60 to £55.70. Today, the shares trade at £48.43p, so that’s a potential increase of another 15%.

Growth and dividends

Unilever shares aren’t the bargain they were, having recovered from last year’s trough to trade at 21.09 times earnings today, as this chart shows.


Chart by TradingView

It’s never been a great income stock and the yield has declined to 3.06%. Dividend growth has been sluggish lately. The board cut the shareholder payout to €1.46 per share in full-year 2021, then lifted it slightly to €1.48 in 2022 and held it there in 2023.

There’s also a risk that today’s global uncertainty could smother the recovery. However, I noted that during Friday’s meltdown Unilever was a rare winner, growing 1.34% as its defensive abilities shone through. I think it could go on a long bull run. If so, I’ll be thrilled to have got in early.

Of course, there are plenty of other passive income opportunities to explore. And these may be even more lucrative:

We think earning passive income has never been easier

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

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.

Harvey Jones has positions in Unilever. The Motley Fool UK has recommended Unilever. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Pound coins for sale — 51 pence?

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

More on Investing Articles

Investing Articles

Up 30% in weeks, does the BAE Systems share price still offer value?

The BAE Systems share price has been on a tear over the past couple of months. This writer sees limited…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Hunting for shares to buy as the market trembles? Remember this!

After a choppy week in global stock markets, our writer goes back to basics in his hunt for bargain shares…

Read more »

Investing Articles

3 simple principles to help build wealth in an ISA

As a new tax year opens up new ISA allowances for many investors, our writer shares a trio of things…

Read more »

Investing Articles

US trade tariffs: what they could mean for UK shares like Ashtead, Compass Group, and Experian

US trade tariffs continue to rock global markets, and the UK is no exception. Our writer considers how a new…

Read more »

Mindful young woman breathing out with closed eyes, calming down in stressful situation, working on computer in modern kitchen.
Dividend Shares

The Trump slump has smashed these FTSE 100 shares!

After a rough week for US and UK shares, investors have been shaken. But now these FTSE 100 stocks have…

Read more »

Investing Articles

£10,000 invested in Rolls-Royce shares 5 years ago is now worth…

Rolls-Royce shares have been on fire since April 2020. Part of this is the result of pandemic restrictions lifting, but…

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

£10,000 invested in Tesla stock at its peak in 2024 is now worth…

Over the last few months, Tesla stock has lost nearly half its value. Here, Edward Sheldon explores a few takeaways…

Read more »

Investing Articles

Is the S&P 500 heading for an epic stock market crash?

Our writer shares his thoughts on a very crazy time for the S&P 500 and the wider stock market. How…

Read more »