Nestle continues to impress

Nestle shares soared last week after the Swiss-quoted group reported full-year profits ahead of consensus estimates, capping off a remarkable year for the food manufacturing giant. The owner of brands such as Nescafe and Perrier attributed its strong performance to price increases and tight cost controls. Nestle’s core business, food and beverages, was buoyed by strong performances in Asia, Africa and the Asia-Pacific region.

Roger Guy and Guillaume Rambourg, co managers of the Gartmore European Selected Opportunities Fund and the Gartmore SICAV Continental European Fund, say “Nestle typifies the long-term large-cap holding we value. Key attributes include a strong balance sheet coupled with high liquidity and good earnings visibility. A high exposure to emerging markets growth represents the icing on the cake. We welcome Nestle’s dividend hike and are also impressed with the group’s ability to pass on sharp rises in raw material costs to consumers.”

Despite stock market volatility adversely impacting company share prices regardless of capitalisation, large caps have fared better than their lighter counterparts and, according to Roger and Guilluame, still offer the best protection against further market gyrations. Other large cap names held within the portfolios include food conglomerate Unilever, utility Iberdrola and pharmaceutical group Novartis.

The Gartmore European Selected Opportunities Fund and the Gartmore SICAV Continental European Fund are both AAA rated by Standards and Poor’s.