I Love Brands, I Love Investing in Unilever

LONDON -- Thinking about it for a minute, it is rare for me to buy any item that is not a brand. This does not mean that I am hugely materialistic or a "brand snob," but I do seem to gravitate toward brands rather than buy supermarket own-brands or whatever else.

For instance, I buy Persil detergent, drink PG Tips tea, and (weather permitting) enjoy a Magnum ice cream, all of which are brands owned by Unilever  (LSE: ULVR  ) (NYSE: UL  ) .

The conclusion?

Either I am the marketing department's dream customer and have been successfully brainwashed into thinking that brands are better. Or I am seemingly among the majority of consumers who favor the reliability, quality, and consistency that brands offer.

Certainly, I and many other consumers could save money through buying Tesco everyday-value products or Asda smart-price goods. Indeed, this would be entirely logical and, although I may notice a difference vs. the brand at first, I'm sure this would quickly wear off.

The thing is, though, I don't switch to non-branded products. And neither do a vast number of consumers across the developed world.

Indeed, the same is true outside of the U.K. and the developed world. More than half of Unilever's sales are derived from emerging markets, where Unilever's sales agents are ensuring the company's products are on full display in local shops as well as vast shopping malls.

So, while the consumer backdrop in the developed world may be stuttering, the growth in emerging markets is being tapped into by Unilever. Such exposure is not only beneficial for the present, but bodes extremely well for the future, with brand loyalty being gradually built up in emerging markets, ensuring the long-term success of the company.

Such rapid development means that earnings per share (EPS) are forecast to grow at an annual rate of 10.5% during the next two years. However, some of that growth seems to be priced into the shares, since the company's P/E ratio is higher than that of its sector at just under 20 (historic) vs. 16.5.

Meanwhile, a yield of 3.2% is below the FTSE 100 average, although the growth of dividends per share should at least match EPS growth in future years.

Of course, just like any leading brand: You get what you pay for. Unilever's shares may not be cheap, but in my view they are well worth the money. They are a brand, after all.

Let me finish by adding that if you already hold Unilever shares and are looking for alternative opportunities in the FTSE 100, this exclusive wealth report reviews five particularly attractive possibilities.

Indeed, all five blue chips offer a mix of robust prospects, illustrious histories, and dependable dividends and have just been declared by The Motley Fool as "5 Shares You Can Retire On."

Simply click here for the report -- it's completely free!

link


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2512023, ~/Articles/ArticleHandler.aspx, 12/19/2014 1:40:39 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement