Crossing the Atlantic for Consumer Blue Chips: Unilever plc (UL)

Over the next five years, Unilever will prove why it will become a dominant blue chip. Over the past five years, Unilever has maintained a consistent industry leading return on equity. At 10% Unilever surpasses all of its competitors for return on assets (ROA). A high ROA is a good profitability measure since it reflects the ability of management to produce profit from each dollar of company assets.  In addition, their P/E ratio (19.3x) is below the Household Products Industry average (21.1x). On top of that, their inventory turnover ratio is on par if not better than their competitors. This means that management is capable of getting products out of the factories and into consumer’s homes quickly. For a market cap company of $110 billion, it is fantastic to rival smaller more agile companies like Hillshire Brands Co (NYSE:HSH) and ConAgra Foods, Inc. (NYSE:CAG). On top of that, Unilever has had positive operating cash flow for the last three years.

Through careful analysis, I feel Unilever has the potential to outperform all of its competitors. I also believe that just like my uncle preached wonders about P&G, I will one day revel in the successes of Unilever. I will initiate a buy position once there is an opportunity in the share price.

The article Crossing the Atlantic for Consumer Blue Chips originally appeared on Fool.com and is written by Jayson Knafel.