How Unilever plc Can Pay Off Your Mortgage

Unilever plc (LON:ULVR) has potential. And it could help pay off your mortgage. Here’s how.

| 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.

217px-Unilever_logo_2004

After making a disappointing start to 2014, Unilever (LSE: ULVR) (NYSE: UL.US) has enjoyed something of a purple patch in recent months. Indeed, its shares have now outperformed the FTSE 100 over the course of 2014, with the consumer-goods company being up 3%, while the wider index is down 2% over the same time period. However, Unilever could have much further to go and could make a positive contribution to your mortgage repayments. Here’s why.

Growth Potential

Clearly, Unilever has huge potential when it comes to the long run. That’s because it has a stable of highly valuable brands that enjoy a vast amount of customer loyalty across the globe, meaning that demand should remain buoyant for many years to come. However, Unilever also has the potential to grow in emerging markets, where overall wealth is expanding at a fast pace and a rapidly growing middle class is beginning to demand products such as luxury personal care items and premium foods, in which Unilever specialises.

This trend looks set to continue and, more importantly, Unilever appears to be well placed to benefit from it. In recent years the company has spent significant sums of time and money in ensuring that its products are widely available and are prominently displayed in outlets. It also has a substantial marketing budget that, while hurting the bottom line in the short run, should pay dividends in the longer term as Unilever develops the kind of customer loyalty that it has managed to achieve in developed economies.

Valuation

Due to the quality of its brand portfolio and its longer-term potential, Unilever tends to trade at a significant premium to the wider market. Indeed, while the FTSE 100 currently has a price to earnings (P/E) ratio of 13.4, Unilever’s P/E is much higher at 19.8. This may seem overly expensive for any company, but when you consider that Unilever’s P/E has been well over 20 in the recent past, the current share price may in actual fact represent good relative value.

Looking Ahead

Clearly, investors are also concerned with Unilever’s near-term prospects, too. While this year looks set to be a tough one, with a Chinese economic slowdown hitting numbers in the first part of the year, next year is set to be a whole lot better. Indeed, Unilever is forecast to grow its bottom line by an impressive 9% next year and, with a relatively low P/E (for Unilever) and huge long term potential, it could have a bright future. As such, Unilever could make a positive contribution to your mortgage repayments.

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.

Peter Stephens has no position in any shares mentioned. The Motley Fool owns shares of Unilever.

More on Investing Articles

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »