Unilever PLC (UL)

(A Top Pick Sep 12/19, Up 5%) Global consumer staples and defensive. Has long owned this. They're growing their personal care division, which offers high margins, and accounts for 40% of revenues. Dove, Lux and Tresemme are some of their brands. 60% of their revenues are free emerging markets, which she expects to grow long term. Near term, developed markets will remain strong because of pantry loading and customers gravitate to well-known brands. UL were able to leap from 2 to 60 factories making hand sanitizer. A consistent dividend grower.

Trades at 18-19x earnings and pays a 3.4% dividend. Problem is they have too many brands and need to get rid of the weaker ones. Nestle executes better, managing their brands better and growing better. Nestle is tough competition; also it's easier these days to start a new brand.

Same thing as applies to Nestle. You are getting a brilliantly run company but you are paying a very high price in the market. They are just on the watch list in case they come back down to earth.

It got an upgrade today from UBS, and rose 3.7%. The consumer space is getting killed by e-commerce, but Unilever has countered this trend by making strategic acquisitions. Last 5 years, total returns have been 15% vs. P&G's 2%. Unilever has mroe than 50% of its products in emerging markets which trust brands, so they can grow. Beta is low, because they deal in consumer staples. Has owned it for a long time.

They owned the stock for a number of years. It is a play on the consumer in the emerging markets. There is strong secular growth there. Per capita income growth is increasing. Global brands like Dove, etc. Yield of 3.3% (Analysts’ price target is $60.50)

This company falls into the “busted brand” category, he thinks. Sales are going down on organic products and there are small niche brands carving out market share. He thinks the market is entering a new world.

A great company, but he prefers to own North American companies. If you do own it, it's one of those companies were you just put it away and forget about it. They definitely have to cut their cost structure, which would be a benefit for them.

He believes in the stock. You are getting earnings growth of roughly 10% a year, and revenue growth anywhere from 2% to 4%. They are a little on the low side now, but just sold off their spreads business, so they have $6 billion in cash. Their strategy going forward is to have subsidiaries which are high margin/high growth. They want to reduce costs and overhead, and get margins higher so that they can a) pay down some debt and b) continue the dividend growth and c) capture more e-commerce markets. 43% of revenues are in Asia, and nobody else is close.

Has held this for a number of years and thinks the emerging markets are beginning to stabilize. 57% of sales comes from emerging markets, and their target is to have 75% by 2020. The middle-class is growing, and as that happens, they will consume more of this company's products. They have homecare, personal care, beverages. Adopted zero based budgeting 2 years ago Dividend yield of 2.8%. (Analysts' price target is $60.)

If looking at the consumer product space, this is the one you want to focus on. This has 43% of revenues coming from Asia. On a broad scale, all the consumer product companies are running into a problem in that they have lost 3% of the global market share to e-commerce start-ups. Their focus right now is to cut costs. They’re starting to make acquisitions in areas that are higher margins, and where they have an e-commerce presence and can start to protect their turf.