The market crash has caused FTSE 100 shares to plummet. Year-to-date, the index is down by roughly 18%.
This has created some great buying opportunities for value investors. Suddenly, the stock price of a company you’ve wanted to invest in for a while might now be cheap.
Of course, it doesn’t always work like this. Sometimes a share is cheap for a reason, and there could be a real risk that in the future the company will collapse.
In these uncertain times, I’ve identified a stock I’d buy and hold forever.
The best FTSE 100 share to buy?
I love consumable companies. This is especially true if they are selling affordable everyday items. In times of economic hardship, I’d hope that customers would continue to make room for these items in their shopping baskets.
That’s why Unilever (LSE: ULVR) is my favourite share in the FTSE 100 index. With household brands like Marmite, Ben & Jerry’s, and Sure in its portfolio, I think customers will always be buying Unilever products.
Currently, Unilever stock is trading with a price-to-earnings ratio of almost 20, which makes the shares a bit on the expensive side. Its share price has grown by over 60% in the last five years. On the surface, this might make value investors shy away from the company.
Its dividend – currently yielding roughly 3% – probably wouldn’t get income investors excited, either.
So what’s so enticing about the Unilever share price?
Why buy Unilever shares?
As I’ve mentioned, I anticipate brand loyalty to be strong when it comes to Unilever’s products. For several reasons, this is crucial for the company, none more so than the ability to raise pricing to improve profit margins.
Buying shares in Unilever is not without risks. One of the common arguments is the potential for underperforming growth. Indeed, elephants don’t gallop and I wouldn’t expect short-term rapid increases in revenue from Unilever.
But I don’t think that’s why people would buy stocks in the company. Instead, I’d buy Unilever shares for its predictability, stable revenue levels, and leading portfolio of brands.
I don’t doubt that the company will be impacted by the coronavirus crisis. However, I think in these rocky times, shares in FTSE 100 companies like Unilever might be sought after for the defensive attributes they possess. This might be evidenced by the growth in its share price of 6% in the year-to-date.
For long-term investors, I think buying Unilever stocks could be a wise move at the moment. I’d imagine its portfolio of brands will constantly change with the times: new products will come and go. But in 30 years, I think people will still be consuming Unilever’s products and spreading Marmite on their toast. In these unusual times, investors might benefit from slow and steady growth in a global giant like Unilever.
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T Sligo 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.