The FTSE 100 has staged an impressive recovery since shedding 32% of its value in the stock market crash. While market sentiment has clearly improved, investors are by no means in the clear. A second stock market crash could be just around the corner. There’s every possibility that share prices will sink lower in the short term. With that in mind, it’s vital for investors buying today to adopt a long-term buy-and-hold strategy. That way, you have ample time to ride out the temporary market downswings while still capitalising on cheap valuations. So, if you have spare cash to invest in UK shares, I reckon this could be the best FTSE 100 stock to buy now.
Fund managers’ favourite
The British-Dutch multinational consumer goods company Unilever (LSE: ULVR) is undoubtedly one of the most popular shares listed in the index. The company is even the top holding in the Lindsell Train Global Equity fund, known for its consistent outperformance and strong returns.
It’s easy to see why the stock is a favourite among the UK’s top fund managers. On an average day, one-third of the world’s population will use a Unilever product. Such products range from Cif and Persil to Vaseline and PG Tips. Moreover, many of the products are household staples, meaning that demand remains resilient even during a downturn. This is evidenced by the group’s first-quarter trading statement. Despite underlying sales growth remaining flat, hygiene and in-home food products performed well.
One of the best UK shares?
Unilever has delivered sustainable growth for decades and its share price gains are testament to this. Since March 2009, the company’s share price has risen by around 250%. What’s more, there’s plenty of room for further growth in my eyes. The company’s emerging markets business has been a catalyst for sales growth and I think this could continue over the long term. With an expanding middle class in many of these countries, Unilever will evidently benefit from the increased consumer spending.
The fact that the company has pledged to pay its dividend will be music to the ears of income investors. With many of the FTSE 100’s top dividend payers suspending or cutting their pay-outs, income investors have been hit particularly hard in this stock market crash. Unilever’s 3.2% yield is nothing to shout about, but it’s better than nothing.
Considering Unilever looks well equipped to navigate the current disruption, I think now could be the perfect time to invest. Despite the fact that the shares have almost recovered from their mid-March lows, they’re still down by 5% since the beginning of the sell-off. In my view, Unilever’s dominant market position and opportunities for further growth mean it’s one of the best UK shares to buy now.
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Matthew Dumigan has no position in any of the shares 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.