Friday newspaper share tips: Burberry, Unilever

Burberry has great financials, it generates strong cash flow - more than twice what is needed to cover its dividend payments – yields over 3.0% and has a pristine balance sheet, the Financial Times’s Lex column said.

Given rapid growth over the past half-decade, the stock trades on a “very reasonable” 18 times earnings, the tipster commented.

Under chief Christopher Bailey, then creative director, it achieved a huge improvement in the look of its wares.

A shift towards retail was also well-timed with the boom in the luxury space.

Unfortunately, the rate of growth in sales has slowed sharply in the past year, with little or none expected over the coming twelve months and Thursday’s worse-than-expected first quarter trading update did little in terms of helping investor sentiment.

Nonetheless, it is much easier to grow a fundamentally health company during times of weak demand than to fix a structurally neglected one.

Mr. Bailey now needs to show he can do the former as well as the latter, Lex concluded.

Unilever boss Paul Polman reiterated a warning that consumer demand remained weak when the consumer goods giant published its full-year results, The Times's Tempus said.

Just like in January, he also reported a respectable increase in the company’s like-for-like sales of 4.7%, about evenly split between higher sales volumes and prices.

To an extent, Polman is likely trying to manage expectations. More importantly however, the manufacturer is rather good at offsetting the effects of those headwinds thanks to its product innovation – even as it continues to push its margins higher and take away market share from its rivals.

Hence, it’s a good bet that Unilever will again to report a 4.0% increase or so in sales despite those challenging markets.

Even so, at 22 times’ earnings “some profit-taking might not be amiss,” Tempus told readers.