Although a falling stock market feels painful when we are already invested, lower share prices can make quality firms better value.
The trick is to drill down into a firm’s individual prospects. If nothing much has changed, it could pay to hold our nerve in the teeth of a stock market gale, hold onto our shares and even to steel ourselves sufficiently to buy more.
1) Emerging market penetration
Unilever’s corporate strategy sees the firm streamlining its product offering and focusing on emerging markets. In 2014, around 57% of the firm’s revenue came from emerging markets, such as Latin America, Asia and Africa.
Such up-and-coming markets offer the prospect of accelerated growth down the line. Unilever’s penetration of these markets is so advanced that the firm’s future depends on performance in such regions, which makes Unilever a focused emerging-market play for investors.
It’s a similar story at SABMiller where 2014 saw the brewer generate around 65% of its revenue from Latin America, Africa and the Asia Pacific region. The firm is skilled in marketing to such emerging regions, drawing on its own South African roots.
2) Consumable branded products
Expansion into fast-growing markets is an important theme in today’s world, but it’s even better when a company has a stable of consumable brands with strong repeat-purchase credentials.
The consumable nature of their products keeps Unilever’s and SABMiller’s cash flow strong, as customers return over and over again to re-buy. However, neither firm takes success for granted. Unilever drives growth by constantly researching, developing, marketing and acquiring new brands to add to its pipeline of potential blockbusters. SABMiller knows its regional beer markets inside out and does a good job targeting specific consumer requirements with over 200 carefully aimed beer brands.
Unilever powers investor returns with brands across the personal care, foods, refreshment and home care sectors, well-known names such as Lipton, Wall’s, Knorr, Hellman’s, Omo, Ben & Jerry’s, Pond’s, Lux, Cif, Sunsilk, Sunlight, Flora, Bertolli, Domestos, Comfort, Radox and Surf.
Meanwhile, SABMiller’s beer products have the added investor-attraction of addictive qualities. The firm thrives by providing thirsty consumers with brands such as Miller Lite, Castle and Grolsch.
We shouldn’t allow stock market corrections and macro-economic wobbles to blind us to the ongoing attractions of sterling, cash-generating businesses such as Unilever and SABMiller.
In fact, general stock market weakness can serve up opportunity for investors to buy shares in such quality outfits at better prices.
Kevin Godbold has no position in any shares mentioned. The Motley Fool UK owns and has recommended Unilever. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.