Why I see the Unilever share price fall as a great opportunity to buy!

With the FTSE 100 (INDEXFTSE:UKX) still in red and its own locational uncertainty resolved, Unilever plc (LON:ULVR) looks to me like a good defensive share to buy.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

As nerve-wracking as the continued tumble of the FTSE 100 can be as an investor, there is solace to be found within it. The solace comes in the form of high-quality companies that are currently trading at low prices, but are a long-term positive bet. I find Unilever (LSE: ULVR) shares particularly attractive in this regard.

There is a long list of reasons to remain positive on the company. The most topical of these right now is the fact that it has decided to remain headquartered in London. Unilever announced the move of its headquarters entirely to Netherlands in March 2018, which would have meant an exit from the FTSE 100 index. After much shareholder protest, however, the company scrapped the idea earlier this month, bringing recent investor uncertainty related to the company to an end. In principle, it might have been a good move to streamline the company further, but it was still apparently one that did not take enough consideration for shareholder sentiments.

Likely because of this, damage to the Unilever share price was exacerbated, with a fall sharper in recent months than in the FTSE 100. For October so far, Unilever has been trading at an average price of 4,066p, which is 4.4% down from the September average price, and makes it the second consecutive month of share price falls. This is also over double the 2.1% fall in FTSE 100 over the period! As a result, Unilever is now available at a relatively cheap rate.

Should you invest £1,000 in Crispr Therapeutics right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Crispr Therapeutics made the list?

See the 6 stocks

And this is at a time when the fundamental case to buy it remains in place. As a leading global consumer goods company with well-known brands like Dove and Lipton, its demand is stable. This makes it a good ‘defensive’ stock, which serves investors well in times of slump when a number of other sectors are witnessing declining demand. With Brexit looming large on the horizon, it is likely that the UK’s economic growth could see a dent, and some forecasters go so far as predicting a full-fledged recession. In this scenario, consumer staples companies like Unilever are among those least likely to be impacted. Moreover, much of the company’s demand comes from other countries, thus insulating it from economic conditions in the UK.

Last but not least, Unilever’s financials remain strong. The company has witnessed increasing profits for the past two years and revenues are set to show growth for the second year running in 2018. In its latest financial update released earlier this week, Unilever showed 2.9% sales growth up until the nine months of 2018. The company’s press release also maintained that sales will continue to be in the 3-5% range, with improvement in profits and a strong cash flow.

Unilever is not necessarily the stock to buy to make fast and big gains, but it is one to hold on to when anticipating rough weather.

But what does the head of The Motley Fool’s investing team think?

Should you invest £1,000 in Crispr Therapeutics right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Crispr Therapeutics made the list?

See the 6 stocks

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Manika does not currently own any shares of Unilever. The Motley Fool UK owns shares of and has recommended Unilever. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Dividend Shares

How a stock market crash could boost investors’ passive income by over 40%

Jon Smith explains how a continued fall in the stock market isn't always a bad thing, especially when it comes…

Read more »

Investing Articles

If an investor put £10k into Greggs shares one month ago, here’s what they’d have today

Greggs shares have had a tough year but Harvey Jones says they're notably cheaper as a result, while the dividend…

Read more »

Young brown woman delighted with what she sees on her screen
Investing Articles

The Phoenix share price jumps 7.5% on today’s results, but still yields a stunning 9.4%!

Harvey Jones put his faith in the Phoenix share price and this morning was rewarded with a 7.5% jump on…

Read more »

Investing Articles

What’s been going on with the Barclays share price?

The rising Barclays share price reflects confidence in management’s strategy to improve business performance and enhance shareholder returns.

Read more »

Investing Articles

Prediction: in 1 year, the IAG share price could reach as high as…

The IAG share price has almost doubled in the last 12 months, but can this momentum continue in 2025? Zaven…

Read more »

Investing Articles

Prediction: in 12 months, here’s where the Glencore share price could be…

The performance of Glencore’s share price has been lacklustre, to say the least. But could all that change over the…

Read more »

Investing Articles

See how much an investor needs in their ISA to earn a £499 monthly second income

Harvey Jones crunches the numbers to show how it's possible to build a long-term second income by investing in a…

Read more »

Investing Articles

I’m considering buying more of this struggling FTSE 100 stock

This FTSE 100 stock hasn't exactly set our writer's portfolio on fire during the time he's owned it. But Paul…

Read more »