Is this one of the best value stocks the FTSE 100 has to offer me?

This Fool is looking to take advantage of the murky economic picture and snap up value stocks today. Is this pick one of her best options?

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An uncertain economic picture has thrown up the opportunity to buy quality value stocks. I reckon some are great opportunities that could bounce back nicely in the longer term.

One FTSE 100 giant I want to take a closer look at is WPP (LSE: WPP). Should I buy or avoid the shares?

Let’s dig deeper to understand the risks, bullish aspects, and outlook ahead to help me make an informed decision.

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Keeping the world connected

WPP is one of the world’s largest communications agencies of its kind. It specialises in advertising, public relations, and communications. With a storied and extensive track record as well as vast presence, it’s hard to ignore in its respective sector.

The shares have been hurt by recent turbulence, but I think they’ve gotten off lightly. Over a 12-month period, they’re down only 4% from 761p at this time last year, to current levels of 724p.

Created with Highcharts 11.4.3WPP PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

To buy or not to buy?

I’ll start with the bear case, as it’s obvious what’s happened recently, in my view. Higher interest rates, soaring inflation, and geopolitical tensions have been a bit of a cocktail for disaster for many economies and businesses. This usually leads to a cut in spending, especially when it comes to advertising and communications.

One of WPP’s biggest money spinners, the tech market in the US, has certainly been impacted by these issues. In turn, WPP’s performance and share price have been dented. Furthermore, weak economic growth in China — another mammoth market for WPP — hasn’t helped either. It’s hard to predict when this could turn around, but I’ll keep an eye on things.

A smaller concern of mine is the threat of marketing and advertising activities moving away from outsourced firms like WPP and reverting in-house. This could hurt earnings and returns too.

Moving to the other side of the coin, WPP’s existing client base, as well as its fully integrated offering, is definitely a draw for me. For context, it works with 300 of the Fortune Global 500 in some capacity, so it’s obviously trusted by some of the biggest and best businesses on the planet. In addition to this, its efforts to capture market share in emerging territories could help boost future earnings and returns too.

As for an all round offering, this includes brand consulting, e-commerce, communications, and more, making WPP an attractive one-stop shop.

Next, the fundamentals look good to me too. The shares look decent value for money on a forward price-to-earnings ratio of just under eight.

Furthermore, a dividend yield of 5.5% sweetens the investment case. However, I do understand that dividends are never guaranteed.

My verdict

I reckon the pros outweigh the cons. As a Foolish long-term investor, I’m willing to look past short-term struggles and towards greener pastures ahead.

It’s hard for me to look past WPP’s offering, experience, and standing in the industry. When economic turbulence dissipates, I’d expect the shares to climb, and the returns to continue flowing.

I’d be willing to buy some WPP shares when I next have some funds to invest.

Like buying £1 for 31p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

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.

Sumayya Mansoor 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.

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