I don't have it in my portfolio yet, but as has become tradition, I buy any stock that my algorithm ranks at the very top, after a human review. Here are its numbers:
$IPS (+1.65%) 🟢 OPTIMAL | Quality 80, Opportunity 92
Yield 5.17% | P/E 9.68x | Debt/EBITDA 0.87x
The dividend consumes only 26.6% of cash flow
Ipsos is the world’s third-largest market research group. Surveys, consumer panels, data for businesses and governments. It’s not a very exciting business, but it has an interesting advantage: every time privacy laws get stricter, its proprietary consumer panels become more valuable.
The reason for the sell-off: The CEO suddenly resigned a few weeks ago, after just one year in the role. In the three companies I’ve worked for throughout my career, whenever a CEO “resigned,” there were other reasons behind it. So we need to approach this stock with caution.
The stock dropped 9% and has remained there. Revenue continues to grow, the balance sheet is clean, and the company has just approved a €300M buyback.
The risks? Generative AI could eat into the market share of traditional surveys. This is no minor risk. But it’s not exactly Blockbuster vs. Netflix either: Ipsos has been investing in its own technology for years.
At 9.7x P/E with a well-covered 5.2% yield, I believe the market is pricing in a decline that hasn’t happened yet.
