Generally speaking, primarily due to their financial strength, FTSE 100 stocks tend to have more stable share prices than those of smaller companies. However, this doesn’t necessarily mean they’re immune from big swings in their stock market valuations.
As an example, take a look at WPP (LSE:WPP). Since 3 October 2024, the advertising and marketing agency’s share price has fallen 53%. This beats all others on the index.
Going in the wrong direction
Much of the damage occurred in February, when the group announced its 2024 preliminary results. And then in July, when it published its preliminary numbers for the first six months of 2025. The press release accompanying the former warned of “weaker client discretionary spend”. The latter described the economic backdrop as “challenging” and said “we have seen a deterioration in performance”. As a result, it halved its dividend.
The impact of artificial intelligence (AI) is partly to blame for its problems. It’s now possible for not-so-creative companies to do more advertising and marketing themselves. But ironically, WPP also sees the technology as a way of recovering. Its former boss said: “I believe that thanks to our investment in AI we can look to the future with confidence”. He’s been replaced by Cindy Rose, formerly a senior executive at Microsoft, who’s widely considered to be something of an expert in the field.
But while WPP’s struggling, it still has plenty going for it. The group has an impressive client list — it works with 300 of the Fortune 500 — and operates in over 100 countries. Looking ahead, a cost-cutting programme should help its bottom line.
However, I don’t want to invest. It’s still unclear to me how the industry will cope with AI. In 2024, Sam Altman, founder of OpenAI, said 95% of what agencies do today will – one day – be done by AI software. Taking a position would be too risky for me.
Bouncing back?
Things aren’t quite as bad for shareholders in Bunzl (LSE:BNZL). But the distribution and services company’s share price has fallen 30% over the past 12 months. This makes it the fourth-worst performer on the FTSE 100 over the period.
In April, it issued a profit warning blaming, in part, the uncertainty created by President Trump’s tariffs. It also cautioned that its operating margin was under pressure and suspended its share buyback programme. On the day, its share price tanked 26%. I remember writing at the time that this seemed like a bit of an over-reaction to me.
But things could be on the turn. In September, it said: “Actions taken in our largest business in North America have re-energised the team and we are seeing early positive indicators of success”. It resumed buying its own shares. Adjusted net debt relative to EBITDA (earnings before interest, tax, depreciation and amortisation) was also at the lower end of its target range.
And because the company reckons it usually benefits from higher inflation, it could be a winner if the rate of price rises doesn’t slow as hoped. The group’s dividend isn’t bad either. While I don’t envisage a rapid recovery in Bunzl’s share price, I think it should do well over the longer term. On this basis, I reckon it’s a stock to consider.
