The Motley Fool

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

Image source: Getty Images.

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.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

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.

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Growth Share… free of charge!

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.

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.