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Forget the TUI share price! I think this FTSE 100 stock could double

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Buying the TUI (LSE: TUI) share price after the recent stock market crash may seem appealing to many investors. Indeed, after the recent crash, shares in the holiday giant are trading at one of their lowest levels in history.

However, the outlook for the holiday industry is far from certain. As such, buying the TUI share price today could come with more risk than reward, compared to other FTSE 100 stocks.

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TUI share price value

The TUI share price decline of 57% since the start of the year highlights investor sentiment towards the firm is fragile. It’s easy to see why. The coronavirus pandemic has devastated the global travel and holiday market.

While some countries are starting to lift restrictions on travellers, there’s no guarantee the market will be able to return turn to the level of activity before the crisis emerged. This suggests the outlook for the TUI share price is likely to remain weak for some time.

What’s more, the TUI balance sheet is relatively vulnerable. The firm has been on an expansion drive in recent years. With earnings slumping, it’s difficult to see how the business will pay for all the capital spending it’s commissioned over the past few years.

Therefore, with so much uncertainty surrounding the long-term outlook for the TUI share price, it might be best to avoid the business.

A better alternative might be media group WPP (LSE: WPP).

FTSE 100 giant

Global advertising spending has plunged over the past few weeks. Companies have reacted to the coronavirus pandemic by putting the brakes on unnecessary expenditure. That includes advertising spending. WPP reported a near-8% decline in net sales in March and was bracing for a much more significant impact in April.

However, WPP is well versed in navigating advertising market peaks and troughs. It’s planning to reduce capital spending by £2bn this year. That should help the business weather the crisis, according to management.

These efforts, as well as WPP’s solid financial position, it could mean it’s well-placed to overcome short-term difficulties. And that should produce a share price recovery over the coming years. It certainly appears as if the outlook for WPP is much brighter than the TUI share price.

In fact, as the most prominent advertising and media agency in the world, WPP may benefit from the crisis. The company’s smaller peers may not be able to survive as advertising spending collapses, leaving WPP to snap up a more significant share of the market in the short term.

Overall, while the TUI share price may look cheap, WPP seems to be the better buy. Recent declines provide long-term investors with the opportunity to buy a high-quality business while it offers a wide margin of safety.

If held as part of a well-diversified portfolio, this investment could have the potential to produce substantial returns for investors over the coming years.

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Rupert Hargreaves owns no share 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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