Why I see digital technology spurring the Unilever share price

Unilever ticks two boxes,: track record and its digital strategy.

| 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.

By most investing criteria, Unilever (LSE: ULVR) is an appealing company. An investment in the company won’t make you rich, but then companies that operate in mature sectors, as Unilever does, rarely do see spectacular growth, but Unilever shares could be effective at protecting your wealth.

What Unilever also offers, however, is a strategy that is creating a new impetus, a new burst of energy, that could catapult it towards faster growth. I refer to its digital strategy and, in particular, the way it is implementing digital transformation.

Thinking digitally

We live in an age of disruption; traditional companies are coming under threat. That is not necessarily new per se, but the speed with which it is happening is.

To avoid the fate of Blockbusters or Kodak, to avoid being ‘ubered’, mature companies that operate via a proven but old business model need to adapt. They need to be able to experiment, where necessary change plans (pivot), and sometimes need to consider ideas that might seem a little ‘out there.’

To an extent, this means thinking digitally. It means digital transformation, removing rigid structures such as silos that can create barriers within an organisation, so that if the company spots a metaphorical iceberg ahead, it can take the necessary action in time.

Unfortunately, thinking digital is not something companies that make up the FTSE 100, or indeed the FTSE 350, are famous for. Unilever is an exception.

Data-driven

Bear in mind that this is a company that has seen its shares rise by around 7% this year, by around 67% over the last five years and by more than fourfold so far this century. Bear in mind, too, that at the current share price Unilever dividends equate to a yield of around 3%. For a company as old as Unilever, with a market cap of around £123m, this performance is somewhere between solid and impressive. 

Its current CEO, Alan Jope, talks about Unilever’s digital plans whenever he gets the opportunity. He talks about how the company is leveraging data, digitising “all aspects of the company,” and making digital a constant presence within the company in “everything” it does. He also talks about shifting the company culture from being “hierarchy led to network.”

Indeed, when creative consultancy Radley Yeldar examined digital communications among FTSE 350 companies, Unilever was ranked as one of the top five. This was from a survey conducted a couple of years ago, before Alan Jope took over as CEO.

It seems to me that a FTSE 100 stalwart, often described as a dependable stock, which was already turning heads with its approach to digital, is now putting even more emphasis on this area. This will, in turn, help Unilever react promptly to, and in some cases anticipate, the very rapid changes that technology is creating. 

Not bad for a company that can trace its history back to a margarine factory setup when Queen Victoria was not even an old lady!

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.

Michael Baxter does not own shares in any company mentioned. The Motley Fool UK owns shares of and 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.

More on Investing Articles

Illustration of flames over a black background
Investing Articles

2 red-hot UK growth stocks to consider buying in April

These two growth stocks are performing well, but can they continue to deliver for investors through 2024 and beyond?

Read more »

Charticle

Is JD Sports Fashion one of the FTSE 100’s best value stocks? Here’s what the charts say!

The JD Sports Fashion share price remains a wild ride during the first quarter. Could it be one of the…

Read more »

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 »