The Motley Fool

The Royal Mail share price has crashed since June! I’d buy now

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.

A Royal Mail GLS delivery man
Image source: GLS

Royal Mail (LSE: RMG) shares have had a tough time of late. Indeed, the Royal Mail share price has been the worst performer in the FTSE 100 recently. Over the past month, it sits in 101st place among Footsie stocks (the FTSE 100 has 101 stocks as one is dual-listed). It’s also down over three and six months. What next for this ailing stock?

The Royal Mail share price has dived

Let’s start with the good news. The Royal Mail share price has had a great 12 months. Over the past year, the stock has soared by more than two-thirds (68.5%) to 414.9p as I write. It’s also up almost a quarter (22.9%) in 2021. However, the shares have been in steady decline since the summer, when RMG neared its all-time closing high of 631p that it had on 11 May 2018.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

On 7 June, the Royal Mail share price hit its 2021 intra-day high of 613.8p. The next day, it hit this year’s closing high of 606.4p. A week earlier, I said that the group needed to make positive progress with several issues. Hence, with the share price then at 578.6p, I said that “I’d see RMG as no better than a hold for now”. Alas, the shares have plummeted since then. After closing at 606.4p on 8 June, it’s been downhill all the way for RMG. This widely held and popular stock is down 13.9% over one month, 22.1% over three months and 16.4% over six months. It’s also down 31.6% since its 8 June close. Ouch.

What next for RMG?

Then again, the past 19 months have been an outstanding time to own RMG stock. On 3 April 2020, the Royal Mail share price closed at 124.3p, down 80.3% from its record high in May 2018. Thus, the shares have more than tripled (+233.8%) from their 2020 low, valuing RMG at £4.2bn.

Having been founded in 1516 by Henry VIII, the Royal Mail is 505 years old. But being the UK’s universal postal service provider in this digital age hasn’t been easy for the group. In this smartphone age of instant messages and video calls, letter deliveries are slowly dying out. However, Royal Mail has benefited enormously from the growth of Amazon, online shopping and parcel delivery. But the firm faces stiff challenges from other fast-growing courier companies.

Since its flotation at 330p a share in October 2013, life hasn’t been easy for it. But after crashing almost a third since 8 June, I see value in this ‘boring’ business. Christmas is coming and already there are early indications of continued growth in online shopping and parcel deliveries. Today, RMG trades on a lowly price-to-earnings ratio of 6.7 and a bumper earnings yield of 14.9%. The dividend yield is 2.4% a year, which leaves room for growth.

I don’t own these shares today. But after their recent crash, I’d be a willing buyer at the current Royal Mail share price of 414.9p. I’d then cross my fingers and hope for exceptional profits for RMG from a ‘Santa boom’!

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies still trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Cliffdarcy has no position in any of the shares mentioned. 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.

Our 6 'Best Buys Now' Shares

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.

Simply click below to discover how you can take advantage of this.