Unilever and National Express impress

by from interactive investor |

A shareholder squabble now over, investors should focus on Unilever's results, while this bus and coaches firm is accelerating hard. Lee Wild, head of equity strategy at interactive investor, gives his view.

Unilever

After the HQ saga ended in defeat less than two weeks ago, it's time for Unilever to shift focus back to the numbers. Management has not taken its eye off the ball judging by these decent third-quarter results.

Currency fluctuations and sale of its spreads business are blamed for a 4.8% drop in third-quarter revenue to €12.5 billion. However, sales were up across the business on an underlying basis, growing 3.8%, with volume up nicely despite price increases to cover rising commodity costs. It's reassuring to hear the 3-5% target for underlying sales growth repeated and further improvement in margin.

Source: TradingView (*)      Past performance is not a guide to future performance

Exposure to non-discretionary spending and a portfolio of mega brands helps Unilever navigate market cycles. A wide range of consumer goods spread across geographies mean it can keep growing and pay a reasonable dividend, even when the chips are down.

Defensive attributes command a premium right now, so the shares do not come cheap. The shares have dipped today but, with numerous threats to the global economy and the UK racing toward Brexit, Unilever shares will be in demand among long-term investors.

National Express

An impressive start to the year at National Express continued over the summer and has spilled over into the traditionally quieter fourth quarter. Passenger numbers are up across all its businesses and third-quarter profit is up over 18% if you include favourable currency markets. Even at constant exchange rates revenue was up 8.9% and pre-tax profit 10.7%.

Standout this time was double-digit revenue growth at the UK coaches operation, or 9.4% increase on a like-for-like basis, and Spanish bus and coach division where organic revenue jumped by 4.1% and long haul services returned to growth. UK bus is quietly improving commercial revenue and better pricing is beginning to show up in the North American numbers.

Source: TradingView (*)      Past performance is not a guide to future performance

National Express shares are up almost 50% in five years, at least six times better than the FTSE All-Share index. The rhetoric is confident, and the shares relatively inexpensive.

There's certainly reason to be optimistic, especially given the urban bus contract in Morocco kicks off next year, prospect of higher margins in the US, and strong growth in the UK. Biggest threat to National Express in the coming months is the weather.

*Horizontal lines on charts represent previous technical support and resistance.  

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