Why I think this FTSE 250 share is a market crash opportunity

This Fool explores a market crash opportunity in a promotional print company that could be a great addition to your portfolio.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

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.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Jabran Khan has no position in any 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.

More on Investing Articles

Passive income text with pin graph chart on business table
Investing Articles

Yields of up to 7%! I’d consider boosting my income with these FTSE dividend stocks

The London market has some decent-looking dividend stocks right now, and I’m tempted by these two for growing income streams.

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

I’d put £20K in an ISA now to target a £1,900 monthly second income in future!

Christopher Ruane shares why he thinks a long-term approach to investing and careful selection of shares could help him build…

Read more »

Mature couple at the beach
Investing Articles

6 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »