Are Unilever plc, Supergroup plc and Ted Baker plc running out of steam?
While the FTSE 100 has endured a rather disappointing month after falling 1.5%, Unilever (LSE: ULVR) has performed twice as badly. Its shares are down 3% during the same period and this could cause a number of investors to become nervous about its future prospects. After all, China is a key market for Unilever and with its GDP growth rate falling to its lowest level for a number of years, the company's outlook could be rather uncertain.
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Despite its recent fall, Unilever doesn't appear to be running out of steam. That's partly because China still offers a superb opportunity for consumer goods companies, with an ever-expanding middle class likely to demand higher volumes of a variety of such goods. It's also because Unilever is extremely well-diversified both geographically and in terms of the products it sells, which means that even weakness in one region may not significantly dim its long-term growth potential.
With Unilever forecast to grow its bottom line by 8% in each of the next two years, it appears to offer upbeat growth prospects in the short-to-medium term. When combined with its long-term prospects, this should be sufficient to push its shares higher and allow it to beat the wider index.
Out of fashion
Also recording disappointing share price performance of late has been Ted Baker(LSE: TED). Its shares have fallen by 11% in the last month and as with Unilever, China is set to become an increasingly important market for the premium clothing seller. As with Unilever, this should allow Ted Baker to achieve above average growth rates over the medium-to-long term and with the company's bottom line due to rise by 10% this year and by a further 14% next year, it appears to be performing well.
Despite such strong growth prospects, Ted Baker trades on a very appealing price-t0-earnings-growth (PEG) ratio of 1.3. This indicates that it offers growth at a reasonable price and with earnings growth being in the double-digits in each of the last five years, Ted Baker seems to be a reliable stock to hold with a wide margin of safety.
Meanwhile, shares in Supergroup(LSE: SGP) have slumped by 8% in the last month and as with Unilever and Ted Baker, this could lead investors to conclude that the company has run out of steam. However, with the changes made by management likely to bear fruit in the coming years, now could be a good time to buy a slice of the high street group.
Notably, Supergroup now has a more efficient supply chain and its logistics have been improved. This should help contribute to a rising bottom line in future years, with Supergroup's earnings due to rise by 15% in the current year, followed by further growth of 12% next year. And with it trading on a PEG ratio of just 1.1, Supergroup could prove to be a profitable buy in the medium-to-long term.
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Peter Stephens owns shares of Unilever. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Supergroup. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
