This year has not been a great one so far for shareholders of consumer goods giant Unilever (LSE: ULVR). Indeed, the Unilever share price has been one of the worst performers in the FTSE 100 index in 2021 and over the past year. But I see reasons to be positive about this mega-cap stock in 2022 and beyond.
The rise and fall of the Unilever share price
In the past five years, the Unilever share price has comfortably beaten the wider FTSE 100. Over the last half-decade, ULVR has climbed by almost a quarter (+23.0%). Meanwhile, the Footsie has added just 6.2% (both returns exclude dividends). So Unilever shareholders must be happy with their lot, right? Not necessarily, because this widely held stock has performed poorly since peaking in 2019.
After surging through to the summer of 2019, the Unilever share price hit an all-time intra-day high of 5,333p on 4 September 2019. It then eased off to hit a record closing high of 5,324p that day. Alas, after this, it was pretty much all downhill for Unilever. By the end of 2019, the stock had dropped to close at 4,350.5p, losing close to £10 from its record highs. Then along came the Covid-19 pandemic to give Unilever shareholders another blow to the guts.
On 16 March 2020, as coronavirus infections went global, the Unilever share price crashed even further. It hit its 2020 intra-low of 3,583.5p on that dark day, before rebounding to close at 3,726p. Thus, from its 2019 closing high to its 2020 closing low, Unilever shares lost three-tenths (-30%) of their value. Yikes.
Of course, as the UK stock market bounced back from its March 2020 lows, so too did the Unilever share price. On 14 October, the stock hit its 2020 intra-day high of 4,944p, later closing lower at 4,892p (also 2020’s closing high). Alas, it’s been pretty much all downhill for Unilever over the past 13 months or so.
Will Unilever have a better 2022?
On Tuesday afternoon, the Unilever share price closed at 3,902.5p, up 44.5p (1.2%) on the day. Thus, the stock is down 10.1% over the past year. Only seven FTSE 100 stocks have done worse this calendar year, while the Footsie itself has gained 13% over the past year. In short, it’s a been a year to forget for Unilever shareholders.
That said, I am reasonably confident that Unilever and its shareholders will have a better 2022 than 2021. For me, the group is an absolute juggernaut, valued at over £100bn at the current share price. Also, at 3,902.5p, the Unilever share price is less than 5% above its 2021 low of 3,721p, hit on 1 March. In other words, the stock is trading very much at the lower end of its 2021 trading range.
Also, Unilever doesn’t look expensive to me as a quality FTSE 100 firm. Its shares trade on a premium price-to-earnings ratio of 22.6 and an earnings yield of 4.4%. Also, the stock offers an attractive dividend yield of 3.8% a year, broadly in line with the Footsie’s 4.1% or so. I don’t own Unilever shares, but I’d happily buy at today’s price. After all, for under £40, I can buy part-ownership of a business servicing 2.5bn people every day, selling hundreds of household name brands. That’s why, despite its underwhelming 2021, I’ve suggested to my wife to buy Unilever while stocks last!