Premium content from Motley Fool Share Advisor UK
Our monthly Ice Best Buys Now are designed to highlight our team’s three favourite, most timely Buys from our growing list of income-focused Ice recommendations, to help Fools build out their portfolios.
“Best Buys Now” Pick #1:
Unilever (LSE:ULVR)
- Q1 organic sales growth of 3% was at the bottom of the company’s medium-term target of 3%-5% expansion, but compared to the organic growth figures other large rivals put out covering the same period, we were pleased.
- One quarter does not make a trend but recent management changes indicate Unilever’s board is deadly serious about aggressively increasing growth rates. The spin off of the slow growth Ice Creams division will go a long way towards achieving that but there is still more work to be done and new CEO Fernando Fernandez appears driven to complete that work – quickly.
- There are secular changes in shopping habits that are denting the once formidable barriers to entry in the fast moving consumer goods market. But even with it easier than ever for a new soap, food, or laundry business to gain market share, Unilever and its large rivals still benefit from global scale in purchasing, manufacturing, marketing and distribution that lead to high margins and robust cash flow plus quite defensive sales due to owning brands at the top, middle, and bottom of the value range.
- With that in mind, the opportunities for higher growth rates, and substantial shareholder returns via the dividend and share buyback programmes, we think Unilever is worth taking a look at in May trading as it is at roughly consensus forward earnings.
