‘Explosive’, ‘dynamic’, and ‘high-octane’ are a few of my favorite phrases. They aren’t ones I’d usually use to explain Unilever (LSE:ULVR) shares – however that is likely to be me being unfair.

During the last 12 months, the inventory is up 13.5%. That’s sufficient to show a £10,000 funding into £11,350 – and that’s earlier than we get to the dividend. 

Time to wake up

Unilever shares have come to life over the past yr or so. However earlier than that, traders needed to wait a very long time for any significant indicators of progress. 

A yr in the past, the share price was just under £40. Sadly, that’s additionally the place the inventory was buying and selling at first of 2017. 

In fact, this doesn’t imply the inventory was useless cash throughout that point. Buyers who purchased in March 2017 and held to the beginning of March 2024 collected £9.94 per share in dividends.

At just below £40 per share, that’s a return of 24% over seven years. On this context, the inventory climbing over 10% in a yr is sort of a hanging shift.

A change of path

The climbing share price has coincided with a change within the firm’s strategy. Unilever has been divesting its weaker manufacturers and focusing its funding behind its most profitable strains.

It’s honest to say the outcomes have been spectacular – in 2024, underlying working revenue grew 12.6%. The final time this occurred was earlier than 2017. 

The epitome of that is Unilever’s choice to divest its ice cream division this yr. Whereas Ben & Jerry’s, Magnum, and Wall’s are robust manufacturers, the manufacturing prices are in the end unattractive.

Given the success of the technique over the past 12 months, it’s one thing of a shock to see the corporate can be seeking to divest its CEO. That’s the latest information. 

Momentum

Final month, the information emerged that CEO Hein Schumacher was going to get replaced as Chief Government by CFO Fernando Fernandez. The explanation given by the board is to extend the tempo of change.

Precisely what the following stage is likely to be is unclear. However one concept is that it’d contain the divesting of Unilever’s meals manufacturers, which embrace Marmite and Pot Noodle.

Progress on this class has been weak for some time. And there’s additionally hypothesis the agency may look so as to add to its present strengths in magnificence and private care through acquisitions.

That is dangerous. Whereas the corporate has had lots of success just lately by chopping its portfolio again, making an attempt to develop by shopping for different companies introduces a hazard of overpaying for development.

Is there extra to return?

Buyers who purchased Unilever shares 12 months in the past ought to most likely be very happy with their returns up to now. And I feel the inventory continues to be price contemplating at right this moment’s costs.

The agency is clearly seeking to maintain shifting ahead. And whereas rising by way of acquisition is dangerous, it doesn’t take a lot creativeness to see the place a possible goal is likely to be discovered.

It’s not so way back that Unilever tried to purchase Haleon for £50bn. With the corporate at present having a market cap of £34bn, one other have a look at the inventory won’t be out of the query. However that’s simply me speculating, in fact.