Because of the market crash, there are opportunities to pick up shares cheaper than before. Almost all companies lost value when the market crashed. Some have recovered and others may do the same over time. In the meanwhile, some shares can be picked up at bargain prices.
One such market crash opportunity is 4Imprint Group (LSE:FOUR). The manufacturer of promotional items is currently trading for 30% less than pre-crash levels.
Market crash opportunity
4Imprint is a specialist manufacturer of promotional items. If an organisation would like a product to have their logo on it, FOUR can supply pretty much anything. Their products range from bags and clothing items to exhibition booths and signage, and even extend as far as sweets and food.
Prior to the market crash, FOUR’s share price was trading comfortably over 3,200p per share. At its lowest point in the crisis, shares could be picked up at just over 1,300p per share. This represented an almighty 60% decrease in value. As I write this, its current share price is over 2,300p which means a recovery could well be underway.
4Imprint has been growing impressively. As a result of this growth, it made its way into the FTSE 250 last year. Of course the Covid-19 pandemic and ensuing market crash have impacted business but to what extent?
Recent performance
In March, 4Imprint released full-year results for 2019 that were positive and reaffirm my point about impressive growth. Revenue increased by 17% from 2018 to $861m. In turn, this led to a 20% in underlying pre-tax profit. A 19% rise in underlying earnings per share to $1.54 enabled the company to lift its dividend by 20%. This dividend became much easier to pay as FOUR ended the year with a 50% hike in net cash.
Since the pandemic meant order values dropped by 40% in March alone, FOUR announced in April it would suspend the dividend payout. It did add that dividend policy would not change and it would reassess its position in the coming months. In FOUR’s latest trading update in June, it confirmed that easing of restrictions meant order counts were reaching 50% of levels compared to the same period last year. Crucially, FOUR added that it was still acquiring new customers, and that its existing customer base was returning since the lockdown had eased.
Why I would buy
4Imprint is the epitome of a market crash opportunity for me. First of all, it is a successful company that has shown double-digit growth over the last few years. Additionally, there is further growth forecasted for the next two years.
Although the pandemic has impacted almost all organisations, FOUR has a wholly online business model. Now that restrictions are easing, order levels are increasing. It is a very well trusted and respected company in the US, which is a key and sizeable market. It has a good dividend policy (under normal market conditions), and its current dividend yield stands at close to 2.5%. Overall I think at its current price and with recent performance, 4Imprint is a good buy with little risk involved.
