Unilever is a stock that’s worth a review

Global consumer-goods giant Unilever (NYSE: UL) seems to have gotten its store back in order, thanks to innovation, pricing adjustments and ad spending.

In a difficult 2009, Unilever saw its volume grow. This was accompanied by broad-based market-share gains that, notably, accelerated throughout the year. Results in developing and emerging markets (roughly half its business) were particularly strong.

Volume, arguably the most direct measure of how consumers respond to a company’s products, is critical. When CEO Paul Polman took over in early 2009, he made revitalizing Unilever’s then-ailing volumes a priority. That operations have turned around accordingly suggests that he’s pulling all the right levers. Currency challenges and higher pension costs have put pressure on earnings, though, and Unilever expects 2010 to be tough.

Consider, however, that Unilever can boost results simply by focusing on internal matters. Polman is committed to driving executive performance while reducing costs and increasing cash flow. So far, he has executed this brilliantly. Also, management has earmarked 1 billion to 2 billion euros per year for bolt-on acquisitions, which means that the recent purchase of Sara Lee’s personal-care brands is likely the beginning of mergers and acquisitions. Unilever is worth looking into.

Ask the Fool

Q: What do brokerages charge for trading stocks? – K.M., Goshen, Ind.

A: Traditional “full-service” brokerages such as Morgan Stanley Smith Barney have been known to charge hundreds of dollars to buy or sell some stocks. Meanwhile, the “discount” brokers of yesteryear, such as Schwab, Fidelity, TD Ameritrade, E*TRADE and Scottrade, have grown to resemble their full-service brethren in many ways, offering stock research, banking services, financial planning and more. Their commissions are different, though, typically around $10 or less per trade.

My dumbest investment

I rode EMC, the electronic storage giant, from 1995 until 2001. I should have sold, but I held on, believing that the company’s storage business would be immune from the dot-com losses. The stock went from around $90 to about $17, and I lost about $300,000. Lesson learned. – Bob, online

The Fool responds: Remember, Bob, that your 1995 purchase price was likely in the $2 range, split-adjusted, so you still came out ahead if you sold at $17, increasing your investment’s value sixfold or more. It’s true that had you sold at the top you would have made much more, but we can never know when a stock is at a peak.