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Three years ago, the This is St James's area (LSE:STJ) share price has halved in value. In fact in Q2, it hit its lowest level in more than a decade. However i FTSE 250 The company managed to collect 32% in the last three months, with indications that the worst is in the rear view mirror. Here's why it would be a smart buy for me right now.
Taking action
Another factor that helped the stock rally was the half-year results released at the end of July. It was the first real opportunity for the management team to outline how they plan to transform the business.
In the report, it was mentioned “observable cost reduction program”. This is expected to deliver net savings of around £500m up to 2030. The results also talked about taking part of these savings to invest. “strategic plans and support long-term growth ambitions.”
These comments clearly helped give investors a lot of hope for the future. Part of the problem in some firms is that the management team won't admit there is a problem. So, things don't change. However, the fact that action is being taken shows that the decline in share prices can be dealt with.
Loyal client base
Another factor that makes me want to buy the stock is the type of clients the company has. Despite all the problems in the last few years, funds under management reached a new record at £181.9bn in H1 2024. This rises to £168.2bn from the end of December 2023.
If a company takes care of more money from customers, it can be more profitable. Of course, client advisors must sell financial products to turn that money into profit. But I was impressed by how the company retained many customers during a difficult time. Not only this, but actually increased the amount of money carried.
This shows me that clients like the offer. Otherwise, they would quickly move the money elsewhere.
Caution is required
Despite these good points, I need to remember the issues that got the company in the beginning. One of the biggest was the £426m compensation pot established earlier this year for overcharging clients.
It is worrying that the systems and policies were not paid the proper fees that should have been charged. Of course, the company is dealing with this issue. But it's a shame that something like this was happening inside without being picked up for so long.
I am seriously considering buying the stock for long-term gain and feel it represents one of the best growth options available right now.
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