Should I Buy Unilever for My ISA?

LONDON -- It's ISA season again, the time of year when the tardy among us rush to make use of our tax-efficient savings allowance before it runs out on April5  -- while more organized investors prepare to make use of next year's allowance.

Whichever you are, sheltering shares within ISAs can be an attractive way of boosting your returns. You don't pay any tax on your gains, and the dividends aren't liable to additional income tax. There's also a real benefit at that other time of year, the tax-return season. You simply don't declare investments held within ISAs on your tax form. (For more information about ISAs, click here.)

ISAs work especially well if you plan to tuck an investment away for a long time. One share I plan to do that with is Unilever  (LSE: ULVR  ) (NYSE: UL  )

Economic moat
Brands underpin Unilever's strength as an investment. It owns a multitude of household names, with 14 of its brands generating sales of more than 1 billion euros each year. That gives it what Warren Buffett calls a "wide economic moat": The company can defend market share and margins because competitors would have to spend prohibitive amounts of money to displace it.

That's one reason Unilever managed a 7% sales rise last year, split evenly between volume growth and price increases.

Defensive
Unilever operates within a defensive sector. The company's food, drink, personal-care, and home-care products are some of the last things people skimp on in hard times. When the FTSE 100 lost half of its value between the end of October 2007 and the beginning of March 2009, Unilever's shares went down by just a quarter. They rebounded further and quicker, too.

In these uncertain times, with intermittent fears over the eurozone, the U.S. "fiscal cliff" and a hard economic landing in China, it's worth having a good slug of defensive shares in your portfolio.

Growth
Emerging markets are the engine of growth for Unilever. Sales there make up more than half of the company's turnover and have grown by 11.5% in each of the past two years. Unilever was an early mover into emerging markets and is now reaping the rewards.

Unilever has great prospects for growth, but it comes at a price. Its shares are at an all-time high, trading on a multiple of 20 times earnings. But if you'd prefer to look at something cheaper, then what better to put in an ISA than "The Motley Fool's Top Growth Stock for 2013"?

Indeed, this alternative share is trading on a prospective multiple of 14, yet its earnings per share have surged 44% since 2009. What's more, there could be considerable "hidden" value that isn't reflected in the share price.

You can find out the name of the company in an exclusive free report. Just click here to download this report straight to your inbox.


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