I went into the weekend with a very defensive hat on. Given some of the moves seen last week. Many tech stocks seemed friendless, and whilst those double-digit percentage losses seemed irrational, they happened.

The noted economist WM Keynes famously said that:

“The market can remain irrational longer than you can remain solvent” 

With that in mind, it seems appropriate to look for something that could add some defensive stability to a portfolio, but which has additional facets as well.

Unilever is the very definition of a defensive consumer staple, and a blue-chip equity. Its market cap is £105.0 billion; it has annual sales of £44.0 billion. Its portfolio currently covers beauty, well-being, personal care, home care and food.

The Anglo-Dutch multinational reported Q3 2026 earnings on 28 October, which included an intriguing combination of underlying sales growth of +5.20%, volume growth of +2.90% and price growth of +2.30%. 

In portfolios of branded and fast-moving consumer goods, one of those three categories is normally sacrificed to achieve growth in one, or occasionally both, of the other two. 

Delivering growth across all three metrics is an impressive achievement. 

If we dig a bit deeper, we find solid growth in all but the food division when compared to 2025; both beauty and well-being and personal care grew by more than 9.0% year over year, for example.

Over the last 5 years, revenue has been broadly flat at Unilever, whilst earnings have grown by +12.60% in the period, which speaks to improving margins and reduced costs at the business, although that hasn't necessarily been reflected in the dividend, which has only grown by +2.22% 

However, that's enough of looking at Unilever in the rear-view mirror, because things are changing, and the company is getting ready for the future by proposing to merge the food division with US flavouring and ingredients business McCormick.

The deal, which is subject to approval by UK competition authorities, would see Unilever shareholders owning just over 55.0% of the merged business; McCormick shareholders would own 35.00%, while Unilever would retain a 9.99% stake for at least a year. 

Unilever will also receive $15.70 billion in cash from McCormick, which it will use to reduce debt and to buy back stock out to 2029.

The UK Competition and Markets Authority is scheduled to publish its initial decision on November 11th.

If the deal is approved, Unilever will become a pure-play Home and Personal Care group, allowing it to focus on higher-margin products with strong brand loyalty. 

Brand loyalty implies a degree of inelastic demand - that is, consumers are likely to remain loyal to those brands even if prices rise.

I think it's important we wait for the CMA decision before jumping into Unilever and reassess if the deal is subject to further investigation or is denied, though that’s not my expectation.

Performance 

The premise for putting Unilever into your portfolio is that it is a large-cap, defensive consumer staples stock that should continue to prosper in an economic downturn and/or attract money into the stock should we see a much larger market correction. It may not outperform or be immune to a crash, but its share price should fall at a far slower and lower rate than many other stocks. 

And we can see how the stock price recovered from the pandemic. In the 7-year chart below. The stock has been in a shallow uptrend since March 2022, and the uptrend line has acted as support throughout that period. Over five years, the stock has risen by +24.88%.

Overall Rating: 4.0/5.0

Pros: Multinational blue-chip business with an established portfolio of brands. Poised to focus solely on the higher-margin, higher-growth HPC divisions. Defensive qualities should allow it to act as a store of value in a recession or pronounced stock market downturn.

Cons: Food division spin-off/merger may not get regulatory approval. Unilever is very much an oil tanker and not a speedboat, so change comes slowly. As a result, growth rates are pedestrian compared to those in the digital economy (though in truth that's part of the attraction.

Technical overview 

This idea isn't really about technicals, though it's interesting to note that over the last 5 years Unilever’s stock price has had daily moves on average that range between 0.80 and 1.10 standard deviations, which speaks to its stock price stability and defensive nature. 

Seasonally, November has been a flat month for Unilever, with a 12-year average price movement of just -0.10%. Its best performance tends to happen from April through July, though there have been modest gains in the first quarter as well in this time frame. Barchart.com rates the stock as a strong buy based on a composite score, drawn from 13 technical indicators, which is up from a moderate sell rating in October. 

Technical rating 4.0/5.0

Fundamental overview 

The fundamental case for Unilever is that it's attempting to change its focus to become a pure HPC play.

The table below, drawn from the firm's Q3 26 report, shows why the focus on higher-margin, faster-growing divisions and products should be beneficial to shareholders. Here are some bullet points:

Home Care was the fastest-growing division, with Q3 underlying sales up +9.1%, supported by +5.4% volume growth and 3.6% pricing. Its sales growth exceeded the nine-month rate of +8.1 %.

Personal Care was the largest division by Q3 turnover at €3.6bn. Underlying sales rose +6.30%, with volume up +3.80% and pricing up 2.4%, which was also ahead of its nine-month sales growth of +5.30%.

Beauty & Wellbeing generated €3.5bn, or 26.0% of Q3 turnover. Underlying sales grew 5.70%, broadly in line with its nine-month rate of 5.8%; volumes rose +3.60% and pricing by +2.10 %. 

Fundamental rating: 4.0/5.0