Company name Unilever plc (ADR)
Stock ticker UL
Live stock price [stckqut]UL[/stckqut]
P/E compared to competitors Fair

MANAGEMENT EXECUTION

Employee productivity Good
Sales growth Poor
EPS growth Fair
P/E growth Poor
EBIT growth Fair

ANALYSIS

Confident Investor Rating Poor
Target stock price (TWCA growth scenario) $34.12
Target stock price (averages with growth) $41.81
Target stock price (averages with no growth) $41.69
Target stock price (manual assumptions) $30.57

The following company description is from Google Finance: http://www.google.com/finance?q=ul

Unilever PLC (PLC), is a supplier of fast moving consumer goods. The two parent companies, Unilever N.V. (NV) and PLC, together with their group companies, operate as Unilever Group (Unilever). Its products are grouped into four principal areas: Personal Care, Home Care, Foods and Refreshment. It operates in three regions: Asia, Africa and Central and Eastern Europe, the Americas and Western Europe. In June 2011, Colgate-Palmolive Company purchased Sanex personal care brand from Unilever PLC. On 1 December 2011, it sold Culver Specialty Brands division to B&G Foods, Inc. On December 6, 2011, it completed acquisition of 82% of the outstanding shares of Concern Kalina. On December 20, 2011, it acquired Ingman Ice Cream. On January 27, 2011, it purchased EVGA’s ice cream brands and distribution network in Greece. On May 10, 2011, it acquired Alberto Culver, Inc. In August 2012, ConAgra Foods Inc acquired Bertolli and P.F. Chang’s Home Menu frozen meals businesses from PLC.

 

Confident Investor comments: At this price and at this time, I do not think that a Confident Investor can confidently invest in this stock.

If you would like to understand how to evaluate companies like I do on this site, please read my book, The Confident Investor.

I recently read an article on CNN Money advising investors to invest in consumer product goods (CPG) companies. The logic was that CPG companies, as a group, have several features that should be appealing to investors:

  • Predictability – these companies can predict how much of a product can be sold in the short-term so they control pricing and inventory well.
  • Dependability – these companies are not going to see massive drops in revenue since consumer purchase their products regardless of the economic climate.
  • Pricing power – due to their brand loyalty, these companies can put forward regular price increases with little negative market reaction.
  • Global reach – while most of CPG companies get the bulk of their revenue in the western world, many have made significant investments in emerging markets.

The problem with the article is that the cited companies were fair at best, and some were poor. Instead of the CPG companies in the article, I suggest that you look at good companies such as Coach [stckqut]coh[/stckqut], Decker [stckqut]deck[/stckqut], Boston Beer [stckqut]sam[/stckqut], or Fossil [stckqut]fosl[/stckqut] (all of these companies are currently on my Watch List). If you want to own one or two of the companies in the article, P&G [stckqut]pg[/stckqut] (the stock symbol is not PR as cited in the article) or Unilever [stckqut]ul[/stckqut] are decent candidates – both companies are very well run.

Settling for companies that are familiar to you and you see on the grocery shelves may not be a good investment strategy.  I suggest that you focus your portfolio on companies that have more upside potential but are still very well run.