This FTSE 100 stock’s price has fallen 23% in 2020. I would buy now for the long term

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The FTSE 100 index recently had its worst quarter in over 30 years. As a result, many large companies share the prizes are now significantly lower than they were at the start of 2020.

If you are a long-term investor, these lower stock prices could be a real opportunity. After all, the key to making money with stocks is to buy low and (eventually) sell high. With that in mind, here’s a look at a high quality FTSE 100 business that I think is worth buying long term today.

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Champion FTSE 100

sage (LSE: SGE), a leading provider of cloud-based accounting software, has seen its share price skyrocket this year. In early January, FTSE 100 stock – owned by two of the UK’s top money managers – was trading at around 750p. Today, however, it is trading at around 575p, which is almost 25% lower.

Of course, due to the coronavirus outbreak there is now a lot more economic uncertainty than there was at the start of 2020. So it makes sense that Sage’s share price has come down. However, the company’s long-term growth story remains attractive, leading me to believe that the stock could potentially generate strong long-term gains from here.

Growth potential

What sets Sage apart from many other FTSE 100 companies is the fact that the company operates in a high growth industry. As businesses around the world increasingly focus on digital, the demand for cloud-based accounting solutions is increasing. Indeed, according to a recent report by the research firm Market Study Report LLC, the market for such solutions is expected to grow at a rate of around 6.4% per year by 2025, which is certainly a healthy growth rate. .

It’s also worth noting that Sage estimates its total addressable market to be 72 million businesses. Given that it currently only has around 3 million customers, this suggests that there is substantial room for growth.

Impact of the coronavirus

In terms of the impact of the coronavirus, the company’s profits will most certainly suffer in the short term. Earlier this week, the group said it expected a higher churn from customers due to business failures. He also said he expects customers to postpone buying decisions. Organic recurring revenue growth is now expected to be below the previously guided range of 8% to 9%.

However, the FTSE 100 company also said that it has a strong balance sheet with a low amount of debt and that it is a “resilient”Activity supported by recurring quality revenues. He added that the disruption of Covid-19 supports the adoption of cloud-based accounting solutions due to the fact that they improve business flexibility (i.e. working remotely).

It is important to note that the company has not announced a dividend suspension.

Buy long term FTSE 100

Overall, there are a lot of things I like about Sage from a long-term investing perspective.

The company has a high level of recurring income, is very profitable and financially sound. He also has an attractive growth story.

The share price has fallen nearly 25% since the start of the year. I think the time has come to carve out a position in this high quality FTSE 100 company.


Edward Sheldon owns shares in Sage Group. The Motley Fool UK recommended Sage Group. The opinions expressed on the companies mentioned in this article are those of the author and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. At The Motley Fool, we believe that considering a wide range of ideas makes us better investors.


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