Gordon Pape, editor of The Income Investor, sees long-term potential in a leading consumer products firm with significant exposure to emerging markets and an increasing focus on environmentally-conscious brands.

Consumer products maker Unilever (UL) – based in the Netherlands -- has one of the highest percentages of sales from the more rapidly-growing emerging and frontier markets, with almost 60% of its 2015 revenues derived from developing countries.

Unilever is the owner of such billion-dollar global brands as Dove, Hellman's, Magnum, Ben & Jerry's, and Knorr,

Revenue in 2015 was €53.5 billion (US$60 billion). After adjusting for foreign exchange, revenue grew 4.1%, while free cash flow totaled €4.8 billion (US$5.3 billion), up 60% from €3.1 billion.

For the six months ending June 30th, sales declined 2.6% to €26.3 billion (US$29 billion), but in constant currency terms were up 4.7%, with emerging markets growing 8% and developed markets 0.2%. Earnings were up 2% to €2.7 billion (US$3 billion), or €0.88 per share.

CEO Paul Polman stated, "We have been preparing ourselves for tougher market conditions in 2016 and do not see any sign of an improving global economy."

One area that Unilever has been active in is acquisitions of socially and environmentally-conscious brands, building on its ownership of Ben & Jerry's.

It agreed in August to buy Vermont-based Seventh Generation, maker of sustainable home and personal care products, including plant-based detergents and household cleaners, with sales of over $200 million in 2015.

It is also in discussions to buy, for a reported $1 billion, actress Jessica Alba's Honest Group, which sells eco-friendly baby and household products.

It would look to distribute these products through the same model as its other $1 billion purchase this summer, Dollar Shave Club, whose mail-order razor business has grown to over $150 million in sales in 2015.

Unilever remains a buy for its solid balance sheet, high exposure to fast-growing emerging markets, innovative product introductions, and strategic acquisitions.

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By Gordon Pape, Editor of The Income Investor