Shares of advertising services provider The Interpublic Group of Companies, Inc. IPG hit a new 52-week high of $23.66 on Dec 7, 2015, before closing the trading session a notch lower at $23.52. This translates to a healthy one-year return of 15.1%.
Interpublic Group’s shares have been steadily climbing up since end-September. Despite its strong price appreciation, this Zacks Rank #3 (Hold) stock has solid fundamentals that may further drive the stock upward. The stock is currently trading at a forward P/E of 20.1x and has a long-term earnings growth expectation of 7%.
Growth Drivers
Interpublic Group’s digital capabilities, diversified business model and geographic reach offer a distinctive competitive advantage to its clients. The company is likely to achieve targeted levels in the coming quarters based on diversification across emerging regions and collaboration/integration across agencies through technological improvement.
In order to fuel its growth engine, Interpublic Group sets aside about $150 million a year for acquisitions. The company continues to look for strategic acquisitions to expand in high-growth regions and key world markets. Earlier, its subsidiary Jack Morton Worldwide acquired Genuine Interactive – a leading digital, mobile and social firm in Boston, which is expected to effortlessly connect clients with consumers, thus boosting Jack Morton’s digital offerings. Additionally, Weber Shandwick, the public relations unit of Interpublic Group, acquired Swedish creative PR agency Prime and its business intelligence division United Minds. This acquisition will help Interpublic Group expand its footprint in the Nordics and allow it to exploit Prime’s award-winning creative talent, drive innovation and improve client service.
Interpublic Group expects to strengthen its position with respect to new business activities as well as opportunities from existing and new clients. Its impressive third-quarter results were driven by revenue growth as well as successful cost streamlining initiatives. The company expects to continue with the growth momentum, as it leverages new business wins to improve its growth outlook. The improving position of the agencies whether in PR, healthcare communications, sports and entertainment, or interactive marketing, gain industry recognition on a continuous basis, which augurs well for its long-term growth. These factors might have boosted investor confidence and catapulted the shares to a 52-week high.
Other Stocks to Consider
Other stocks that look promising and are worth looking into now include Marin Software Incorporated MRIN, Omnicom Group Inc. OMC and Publicis Groupe SA PUBGY, each carrying a Zacks Rank #2 (Buy).
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