I think this FTSE 250 stock is a great buy after its 15% drop

first_img “This Stock Could Be Like Buying Amazon in 1997” Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has recommended Homeserve. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Image source: Getty Images See all posts by Manika Premsingh Manika Premsingh | Tuesday, 18th May, 2021 | More on: HSV Simply click below to discover how you can take advantage of this.center_img Our 6 ‘Best Buys Now’ Shares Enter Your Email Address The stock in question is Homeserve (LSE: HSV). The multinational home repairs provider is down almost 7% today, after it released its final results for the year ending 31 March 2021. This is a continuation of a larger trend. In the last month the FTSE 250 stock’s price has fallen 15% and about the same over the past year as well. It has seen much volatility since, even reaching multi-year highs last August, but it is essentially trending downwards. 5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Why is the Homeserve share price falling?I reckon the Homeserve share price is falling for two reasons.One, there is a broad and prolonged rotation out of defensive shares. As the outlook for coronavirus-impacted sectors improved last year, defensive shares started looking expensive by comparison. Two, it does not help that the Homeserve share price is still comparatively elevated. Its price to earnings (P/E) ratio at 35 times is still quite high especially considering that its share price has fallen 28% from its highs last August. Strong performanceThat does not take away from the stock’s credentials in my view, though. It is a financially strong company that reported 15% revenue growth for the year ending 31 March 2021 earlier today. And it has managed robust growth despite lockdowns, which made access to homes difficult. It has seen a plunge in statutory operating profit by a whole 55% because of a big one-off charge on eServe, its UK customer relationship management solution, which ultimately did not work out well. The charge is glaringly large at £84.8m, and has wiped out a large part of its operating profits. However, considering its financial performance over the years, I am inclined to overlook it. At least for now.Homeserve expects to deliver an acceleration in performance next year. Considering that the global economy is expected to pick up speed through the rest of 2021, I believe in Homeserve’s forecast. Also, while there could be some come-off in demand as people return to offices, this may be more than made up for by the relaxation in lockdowns.  More positives for the FTSE 250 stockHomeserve also pays a dividend and currently yields 2.3%. While this is not a dividend yield that qualifies it for an income stock, it is an additional gain. After all, there are instances of growth stocks that offer little more than rock-bottom dividend yields.And in my view, Homeserve is a growth stock. Before the unexpected happened last year, its share price had been steadily rising. In fact, if I had bought the stock five years ago, I would have more than doubled my money by now. My takeawayI think these developments bode well for Homeserve. Additionally, I am fairly convinced that the stock market rally can continue, even with hiccups. This means that the likelihood of share price increase is higher than it would be in an indifferent market.I think now is an opportunity for me to buy.   I think this FTSE 250 stock is a great buy after its 15% drop I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. 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