Evenlode: Don't Write Off Consumer Stocks for Income

Currency weakness has been a significant drag consumer businesses over the last two years. However, currency headwinds will ultimately ease and turn to tailwinds

External Writer 5 October, 2015 | 4:30PM

This article is part of Morningstar’s Guide to Income Investing. Whether you are looking grow your pension pot, or invest for retirement income, this week we have all the news, information and education you need. Here, Hugh Yarrow, manager of Evenlode Income urges investors not to write off the global consumer.

Consumer branded goods companies have significant sales exposure to emerging markets and prices were hit by the recent China-driven stock market volatility. However, recent results in the sector were a reminder that despite tough conditions globally, these businesses enjoy a resilient demand profile – shampoo, soap, toothpaste, beer, cigarettes – pricing power and good levels of cash generation.

Unilever (ULVR), for example, managed to post underlying sales growth of +6% in emerging markets for the first half of the year, during a period in which GDP for emerging markets in aggregate, excluding China, appear to have not grown at all. Several of our positions in this sector also have very good potential for margin progression in our view, thanks partly to falling commodity prices and also to efficiency improvements.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Unilever PLC4,375.00 GBX0.30

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