UK stocks have just enjoyed a strong week. In the four days before Good Friday (April 3), they climbed 4.65%. Which is incredible for anybody who’s been watching the news. How should investors respond?
The war in Iran continues, but lately investors have decided to look on the bright side. They believed Donald Trump when he said peace talks are happening, and ignored Iran when it said the opposite. They’ve absorbed so many shocks lately, they’ve decided to keep calm and carry on. Which is always a pretty solid strategy.
FTSE 100 volatility brings opportunity
Since 2020, investors have seen off the pandemic, Russian invasion of Ukraine, cost-of-living crisis and US tariffs. Markets fell every time, but quickly bounced back. Nobody wants to get locked out of the post-Iran recovery, when it comes.
Buying shares either side of this year’s Stocks and Shares ISA contribution deadline on April 5 nevertheless takes nerve. There’s a chance markets have further to fall. At The Motley Fool, we’ve learned that nobody can second guess where the stock market is going. Shares may crash next week, they may recover at speed. Nobody knows.
The best option is to feed in money whenever investors have cash to hand, then hold for the long term, to give the shares and reinvested dividends time to compound and grow. Today’s volatility is a good opportunity to buy stocks at a reduced price, and with a higher starting yield.
The Unilever share price has plunged
One stock worth considering is consumer group Unilever (LSE: ULVR). For years, it was seen as a bright, shining FTSE 100 blue-chip, but lately its star has dimmed. It’s been hit by the cost-of-living crisis, the attentions of activist investor Nelson Peltz, and a sense that the business just got too big and sprawling to manage.
On 12 February, the board said it expected 2026 sales growth to be at the bottom end of its underlying range of 4%–6%, due to slower market conditions. As the Middle East explodes and oil price climbs, those conditions must look a lot worse today.
The market has also responded poorly to news that Unilever will sell most of its food business, including Marmite, to US-based McCormick. This follows the sale of its ice cream division last year. Personally, I think this could be positive, as it allows Unilever to focus on its personal care and beauty brands, which have bigger margins.
Also, I’ve been worried about its food brands for years, thinking the likes of Hellmann’s, Knor, Bovril, Pot Noodle, Colman’s and Horlicks look vulnerable to changing consumer trends. Weight loss drugs have sharpened that concern. The market begs to differ though. Unilever shares have fallen 21.7% in the last month, and now trades at levels seen almost a decade ago.
The plus side is that they look much better value, with a price-to-earnings ratio of 15.5. I wouldn’t say it’s cheap, but this is well below its historic P/E of around 24. The dividend yield has crept up to 4.4%. I think it’s worth considering, and can see plenty more great value FTSE 100 stocks to consider. Unilever is far from the only company trading near a 10-year low today.
