Stock market

Is this forgotten FTSE 100 hero going to make investors rich again?

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Life goes in cycles, and of course it does. FTSE 100 Stock winners become losers, and vice versa. The consumer goods giant Unilever (LSE: ULVR) is a perfect example.

For years, Unilever’s share price just seemed to climb and climb, making investors fortunes. I looked fascinated, and disappointed. I prefer to buy stocks at the bottom rather than the top, as this gives me a cheaper entry price and lowers the risk of a price drop. Unilever never gave me this opportunity.

It always seemed to climb, and was routinely expensive, trading at around 24 times earnings. Production fell by barely 2 percent. So I decided to sit and wait. Suddenly, instead of going right, everything started going wrong for Unilever.

Share values ​​can be cyclical.

The fall took me by surprise. Unilever has more than a billion customers in more than 200 countries. It sells everyday essentials that people need to buy, protecting its income from fashion shocks and providing some protection in a downturn.

Be that as it may. CIF, Colman’s, Domestos, Dove, Marmite, Surf or vaseline, Most of us have at least one Unilever product in our homes, and usually more. Yet the company began to attract the attention of activist investors, who believed it was too big, too broad, too lacking in focus, and pursuing the wrong strategy while elevating social responsibility. .

Throw in a cost-of-living crisis, and Unilever was on the rack. Suddenly, its share price was falling, and it was cheap. Even the produce was starting to look appealing.

I had waited long enough. So on June 7 last year, I bought Unilever shares at about 17 times earnings, yielding 3.75%. I commended myself for being patient and bargaining. I didn’t feel so smart when my shares immediately dropped 10%, leaving me in the red.

where i stayed Until last month, when Unilever shares suddenly rose 7.97%. The group cheered investors positively in the first quarter, with all five business divisions posting growth in core sales.

Stock up

My holding is now in the black – only – 2.87% more than I paid. Plus I have received my first dividend. The share price is still down 5.62% over one year and 9.02% over five. Which is a pretty serious underperformance, given that the FTSE 100 is up 5.59% and 14.02% over the same periods respectively.

Shares are still relatively cheap by previous standards, trading at 18.76 times earnings. A yield of 3.54% is not too low either.

CEO Hein Schumacher is pressing on with it. “Commitment to doing less, better and with greater impact”. Still, I don’t expect Unilever to suddenly become a gangbuster. Core sales growth should be 3% to 5% this year. Investors remain skeptical. Makes sense.

The board has been struggling to increase consumer interest in its ice cream business, including Magnum, Walls And Ben and Jerry, which it hoped to sell for £15bn. Another concern is that the global cost crisis is deepening, and consumers are sticking to buying cheaper brands.

On balance, I think Unilever is well on its way to recovery and it’s not too late to get on board. I’m planning to buy more before climbing over it.


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