This share price has fallen 50%. I’m buying and here’s why

first_imgThis share price has fallen 50%. I’m buying and here’s why Andy Ross owns shares in WPP. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Enter Your Email Address “This Stock Could Be Like Buying Amazon in 1997” Image source: Getty Images. See all posts by Andy Ross I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.center_img Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Andy Ross | Tuesday, 17th March, 2020 | More on: WPP Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Our 6 ‘Best Buys Now’ Shares Simply click below to discover how you can take advantage of this. Nearly all shares have been hit in the recent market crash. Some though have as ever been hit harder than others. One such company is global advertising and marketing group WPP (LSE: WPP).The sharesThe WPP share price has fallen by over 50% in just the last month. It means the shares now have a P/E of 8 and a dividend yield of over 10%. This is a seemingly very attractive combination of a low-value share and a high income.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…However, WPP has fallen worse than many other companies in the current bear market because it’s got other problems on its hands. For its latest full year, pre-tax profits fell to £982m from £1.2bn. Revenue slipped 0.3% to £10.8bn. Operating profits from continuing operations fell 5.6% to £1.6bn.Coronavirus, if it causes a global recession, is likely to hit advertising particularly hard. Advertising is one of those corporate budgets that companies cut when economic conditions toughen. It seems highly likely that’s exactly what’s going to happen in the short term.Another challenge WPP faces is the dominance of Facebook and Google when it comes to digital marketing. As brands move spend online and away from traditional advertising there’s the possibility it may squeeze opportunities at some of WPP’s agencies.Reasons for optimismThe advertising holding company clearly faces some financial and operational challenges. This explains why the share price has slumped so rapidly. Though it’s not all bad and investors may see value in the shares, especially now.In the UK and ‘rest of the world’ (which includes Asia) the business is still growing, albeit at a low level. The regions saw 0.3% and 1.4% revenue growth respectively. The sale of its Kantar operation means debt can be reduced, from £4bn down to £1.5bn, while £950m will be returned to shareholders through a buyback.The business under Mark Read has slimmed down a lot after rapid acquisition-led growth under Sir Martin Sorrell. Some 50 agencies have gone in the last 18 months. The business is now using data and technology to offer new services to clients, for example helping them succeed on online marketplaces like Amazon and Alibaba.The dividend has been held flat for a couple of years, allowing management to avoid a cut thus far, and dividend cover is still relatively healthy at over 1.3x.Taken together, I am confident with my recent purchase of WPP shares and would be tempted to pick up more once it becomes clearer that the market is recovering from its current coronavirus-induced panic.I know the group faces a number of hurdles, but overall, it’s a business with good margins, reducing debt and a very healthy dividend. The potential for a turnaround to drive significant value for shareholders is also appealing. The ad world is changing, but so is WPP.last_img


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