Stockchase Opinions

Srikanth Iyer Unilever PLC UL-N BUY Jul 09, 2012

You get about 35%-40% coming from emerging markets, especially India. If you can get the current dividend yield capture, and ride the volatility in the market for the next 3-6 months, you have a very good security. Anytime there is a dip in the market, Buy.
$33.490

Stock price when the opinion was issued

food processing
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DON'T BUY
They have too many brands, and overextended themselves. Not managed well, though managers are addressing issues. Little earnings growth short-term. Commodity input costs are another worry.
BUY
It's has lagged, but is a great consumer company with a strong presence in emerging markets. There is an activist investors on the board, so expect big changes at UL. It's a phenomenal company that will raise its dividend beyond inflation for years.
PAST TOP PICK
(A Top Pick Nov 08/21, Down 4%) A defensive name. Has owned this since 2015 and will hold on. Pays around a 5% dividend.
DON'T BUY
UL vs. NSRGY Two quality names that have performed well over time, but relatively expensive. He prefers Danone, #1 in both dairy and plant-based, cheaper. Over the last decade, Danone has maintained its #1 position but has lost market share, stock's not up at all, slow to innovate. UL has outperformed Danone in the past decade. Real catalyst is new CEO who's made sweeping changes that will boost top and bottom line growth.
BUY

Pays a 3.5% dividend. This is the way to play emerging markets, from which they derive 55% of revenues. The dividend will grow over time.

PAST TOP PICK
(A Top Pick May 11/22, Up 23%)

Very slow growth however excellent underlying business.
Great franchise that has excellent brand.
M&A will continue to enhance shareholder value.
Steady dividend yield.
Expecting further share price appreciation.
Strong management team. 

HOLD

60% of revenues come outside North America, which are currencies that are fading against the strong US dollar which rose along with interest rates. If the USD falls, then the S&P could underperform (they've outperformed the past 10 years). UL needs a lower USD to increase earnings. He still owns it. Pays a near-4% dividend, so he's holding onto it and waiting.

BUY

His name in consumer stocks. Big, boring business. Has grown developing market revenues to be greater than half the company. Brand power, staying power. Yield is 5%.

BUY
UL vs. Nestle

UL is his choice. Stock price was challenged, but look at the business fundamentals. 2024 was spectacular, with prices going up ~20-30%. Over 50% of revenues are from EMs. Pretty diversified and pretty safe way to get exposure to EM growth.

BUY
Tariffs -- how to benefit?

Consumer staples are outperforming in the last few days, and that speaks to the advantage of having a balanced portfolio. Companies like KHC, UL, KVUE, and Nestle. It's not that they won't be affected (their costs would go up), but they're far less cyclical than other businesses. Earnings will be much more stable. Earnings could fall 10%, but not 50%. Dividends will be sustained.

Companies like Unilever and Nestle are huge in NA, but huge globally as well.