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WPP Plc (WPP): Alpha Trade: 4.3% Profits Taken

Idea Profits Taken

PositionTickerDirectionCloseOpenCloseProfit
WPP/UKXWPP Plc (α)Buy23/02/2021120.81264.3%

Idea Summary

Alpha Trades (α)

This is an Alpha Trade (α), for a more detailed explanation of these type of trades please read the relevant section in our Technical Analysis and Coverage Guide.

In summary though Alpha Trades involve taking a position in an equity and then taking an equal and opposite position in its parent index, allowing you to gain exposure to an asset’s expected outperformance/underperformance whilst insulated from much of the wider market volatility.

PositionTickerTypeDirectionDatePriceTargetStop
WPP/UKXWPP Plc (α)AdvancedBuy14/01/2021120.8126116

Idea Background

We sent out a buy trade idea on WPP yesterday, but for those interested in a more market-neutral position the WPP (α) has moved to attractive levels. The chart above has multiplied the WPP share price by 1,000 just to make the Y axis more readable. On this scale price action has dropped down towards 120, the bottom end of the current bullish trend.

The WPP (α) has traded within a tight trading range for all of the 200, 100 and 50 period linear regression channels, blue, red and green channels respectively.

The weekly chart below flags up that this trade should not be converted into a longer term position as over this timescale the trend is negative. But positive moves today suggest that we are due to continue with the positive daily trend and that current levels are offering attractive entry points to buy WPP (α) here using tight stops down at 116, and targets of the recent highs up at 125.

TradingView Code: LSE:WPP*1000/TVC:UKX

Weekly Chart

Company Profile

WPP plc, a creative transformation company, provides communications, experience, commerce, and technology services in North America, the United Kingdom, Western Continental Europe, Asia Pacific, Latin America, Africa, Middle East, and Central and Eastern Europe. The company operates through three segments: Global Integrated Agencies, Public Relations, and Specialist Agencies. It engages in the business of planning and creation of marketing and branding campaigns; designs advertisements across all media; and provides media buying services including strategy and business development, media investment, and data, technology and content.

The company provides advises to clients who are seeking to communicate with a range of stakeholders from consumers to governments and the business and financial communities. WPP plc was founded in 1985 and is based in London, the United Kingdom.

Analyst Coverage

Fundamental Data

Ratios31.12.15(£m)31.12.16(£m)31.12.17(£m)31.12.18(£m)31.12.19(£m)
PE Ratio17.3716.579.389.9421.25
PEG1.880.770.3-0.24-0.51
Earnings per Share Growth0.09220.21450.3175-0.4083-0.4143
Dividend Cover2.011.942.411.420.84
Revenue Per Share949.57p1122.99p1210.48p1250.39p1058.73p
Pre-Tax Profit per Share112.19p143.66p158.26p113.78p77.39p
Operating Margin0.13340.14340.1250.09170.0979
Return on Capital Employed0.12790.14130.11830.08830.0906
Dividend Yield0.02860.03110.04420.07090.0563
Dividend per Share Growth0.21830.11060.2612-0.0022-0.003
Net Asset Value per Share (exc. Intangibles)-366.76p-476.80p-431.37p-448.76p-283.72p
Net Gearing0.42040.4430.47220.42810.1907

Technical Analysis Guide

Please review the Research2 Technical Analysis Guide for more in depth explanations of most of the techniques used in our coverage.

Remember the Rules

Please also remember to regularly review the Research2 Trading Rules. Even when following the rules trading in the markets is difficult, attempting to trade the markets outside of the rules, just makes it even tougher. Target Zones and Stop Areas are provided for general reference, all actual stop and target areas need to be fine tuned by the individual traders, in line with their own risk profile, and once the Trading Rules have been followed and individual position sizing calculated.

Our Analysts

Research2 has over 50 years combined experience in various dealing rooms. Alex Neale is our co-founder and Senior Analyst and has over 20 years experience within the dealing rooms of various investment banks.

Alex graduated with a first, and top of his year, at University with his Business Studies degree, and also came top of the year in the Financial Management course, and won awards for the best coursework in the Financial Management course and also for best performance in exams overall. 

He is also one of the most qualified Technical Analysts working in the market today. Having secured qualifications from the three major global Technical Analysis bodies. The Society of Technical Analysts (STA), The Chartered Market Technician award from the Market Technicians Association (MTA) and the Master of Technical Analysis (MFTA) from the International Federation of Technical Analysts (IFTA), where he gained the Brooks Memorial Award for the best peer reviewed paper of the year. Click here to read the award winning peer reviewed paper. Alex is also a Chartered member of the CISI (MSCI) and fully qualified to give derivatives investment advice. 

So in terms of dealing experience, qualifications, fundamental knowledge and technical expertise, Alex has it covered. 

Disclaimer

This note is issued by Research Squared Ltd (Research2).  This note is prepared and distributed for information purposes only,  as the specific needs and investment objectives of each individual reader have not been taken into consideration. This note may contain information obtained by Research2 from third parties; the source of information will usually be disclosed.  Research2 makes no representation and gives no warranty as to the accuracy or completeness of the contents of this note.  Any person placing reliance upon this note does so at their own risk. Research2, its officers, employees and affiliates shall not be liable to any person in any way whatsoever for any losses, costs or claims arising from any inaccuracies or omissions in this note or any reliance on this note. This note should not be considered to be a solicitation, nor the offer of advice, for the purposes of the sale or purchase of any security, investment or derivative. The information contained in this note is not intended to form the basis of any investment decision as the specific needs and investment objectives of each individual reader has not been taken into consideration and so this note should not be considered as a recommendation by Research2 or any other person in relation to any of the companies, stock, commodities, currencies or other markets referred to in this note. The information contained in this note has not been verified by Research2 and Research2 undertakes no obligation to provide recipients of this note with any additional information or any update to or correction of the information contained in this note. This communication is not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation.

Please note the value of investments and any income derived from them can go down as well as up and the value of an investor’s investment may be subject to sudden and substantial falls. Past performance is not an indicator of a future positive performance. If in any doubt, consult an independent adviser to ensure you understand the products and are fully aware of the risks involved. 

This document is being communicated by Research Squared Ltd, a limited company incorporated under the laws of England and Wales. Company Number 12924446; registered office address Penstraze Business Centre, Chacewater, Cornwall, TR4 8PN. In the United Kingdom it is only being provided to those persons to whom it may lawfully be issued under The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005.

Charts provided by Tradingview.com

Fundamental Data provided by Yahoo Finance and FTSE Russell Data Solutions

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