Shares of advertising services provider The Interpublic Group of Companies, Inc. (IPG) hit a new 52-week high of $20.72 on Dec 26, 2014, before closing the trading session a notch lower at $20.66. This translates to a healthy one-year return of 21.6%.
Interpublic Group’s share price has been on steadily climbing up since mid-October. 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 21.0x and has a long-term earnings growth expectation of 11%.
Growth Drivers
IPG media brands, a global media holding company of Interpublic Group, and mobile advertisement services provider Millennial Media Inc. (MM) recently formed a year-long global strategic partnership to deliver data-driven mobile solutions.
The deal covers all of Interpublic Group's creative, digital, marketing services and media agencies. Under this agreement, Interpublic Group’s Cadreon – the centrally automated buying platform – will be integrated with Millennial Media's programmatic (automated) advertisement offerings.
Also, Interpublic Group agencies and their clients will gain access to Millennial Media's resources to achieve greater efficiencies. This partnership will leverage the power of mobile real-time bidding (RTB) technology, delivering superior targeting and retargeting and programmatic inventory.
Interpublic Group sets aside about $150 million a year for acquisitions. The company completed 11 strategic acquisitions last year. The company has finalized six deals so far in 2014, the most notable among them being the acquisition of digital company Profero in January.
Interpublic Group’s digital capabilities, diversified business model and geographic reach offer a competitive advantage to its clients. The company is expected to achieve healthy growth in the coming quarters based on diversification in emerging regions and collaboration/integration with agencies resulting in technological improvement.
Moreover, Interpublic Group continues to look for strategic investments/acquisitions to expand in high-growth and key world markets. The company’s efforts in reducing costs, continuous margin improvement, strong balance sheet and better capital structure further enable it to remain profitable amid a challenging macroeconomic environment.
Other Stocks to Consider
Other stocks that look promising and are worth looking into now include Omnicom Group Inc. (OMC) and TubeMogul, Inc. (TUBE), both carrying a Zacks Rank #2 (Buy).
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