Unilever PLC (UL)

Phenomenal global player. Don’t sell. The consumer staples area has been one of the most stable over the last couple of years. The entry point is too high here. They will keep growing, however.

3^rd largest global consumer product company, and 59% of it is in emerging markets. Over the long-term, you have done 3% compound over the last 3-5 years, and 7% compound over the last decade. 2.93% dividend yield.

He looks at global companies that are diversified. UL-N has European exposure, for example. This group is going to do well in a benign commodity environment. 8-10% free cash flow margin gives good stock performance. UL-N is doing better than others in the space.

Diageo (DEO-N) or Unilever (UL-N) foreign income focused investor? Neither of these is cheap today. You are paying a high price for very stable earnings. The difference between the 2 companies is that Diageo has been basically a no growth story in terms of earnings and revenues. Unilever is well positioned globally, especially in emerging markets, and will give you earnings growth along with better dividend growth. If he had to pick one or the other, it would definitely be this one.

Stock vs. Stock. DEO-N vs. UL-N. UL-N has a track record of slow, modest increases in its dividend. Profit growth in emerging markets will not be as strong, but he would buy this and put it away.

Sales have turned out better than expected. This is a big consumer product company. Feels they are realizing that they have to consolidate their products and sell off non-core products.

You own this because they have about 55%-58% emerging market exposure. A global leading consumer products company in food and personal care. It is really a play on the middle class in emerging markets. Underperformed in the last year because emerging markets have had some difficulty with their economies, so growth has slowed. She likes the story for a long term. Yield of about 3.5%.

Part of the issue here is currency related, because of where they are. The stock has kind of meandered a bit. The entire consumers’ staple space is not cheap and has pushed valuations up. You want to be very careful of the types of names you own in this area.

The collapse of the euro helped them. Companies like this have too many brands. Those brands are all making money, but when you are a big company and own all these things, you tend to just keep them. Thinks they are going through and disposing of non-core brands, which will create better margins.

Global super star company. A good track record in emerging markets. They are struggling with growth. There may be a tax advantage as to whether you buy it in the UK or through an ADR. There are different tax treaties between the UK and Canada and the US and Canada.

(A Top Pick Jan 7/14. Up 3.11%.) Still likes it. A long-term secular play on consumer spending and emerging markets. About 55% of their revenues are from emerging markets. Last year was a difficult time for a lot of the economies as they were going through a cyclical slow down. They are still seeing basic growth, but not as strong as it was before. Meanwhile in the developed markets, they were seeing very weak growth coming out of Europe. It was lacklustre out of the US as well. They have good products. They are restructuring and focusing on brands. You’re still getting a good dividend of about 3.5%. As we roll into 2015, the comparables get easier and you are seeing stronger growth coming out of the US, and hopefully there will be recovery out of Europe.

Stock vs. Stock. MDLZ-O vs. UL-N. Consumer products. Prefers this to MDLZ-O. Went international very early on. But now they are improving with international purchasing, etc. This one should outperform MDLZ-O. They have not rationalized their large product range. Rationalizing could be the opportunity for growth.

(A Top Pick Jan 7/14. Up 7.62%.) Emerging-market exposure long-term is positive. Emerging-market weakness has been a headwind this year. Emerging-market is slowing, but has still been a 5%-6% growth. In developed markets, things have been quite dire, particularly in Europe, and even in the US earlier on this year. She still likes it as she is focusing on the long-term story. Company has been restructuring parts of their portfolio and focusing more on personal care. Pays an attractive yield of about 3.8%. They increase their dividend fairly regularly.

It is a serial dividend increaser and the balance sheet is incredible. They are on sale because of their exposure to the emerging markets. Prefers to PG-N. This will do well over the long term.

Great company. Fundamentals stack up well. Had a bit of headwind on its earnings because of foreign exchange. Free cash flow growth, quarter after quarter, in a very stable business. Anything below $40 looks very interesting. The opportunity here is to buy it at a lower PE multiple compared to some of its peer group.