Picture supply: Getty Pictures
Virtually precisely a yr go (26 November 2023), I declared which UK firm I assumed had been the most effective share to purchase initially of the yr. That was FTSE 100 info and analytics agency RELX (LSE: REL).
There have been so many issues to love about RELX. It was a bone fide UK tech star, having outpaced the Nasdaq for the reason that begin of the Millennium, rising virtually five-fold.
It additionally appeared prone to profit from the synthetic intelligence (AI) revolution, because it harnessed the ground-breaking tech to complement its proprietary datasets.
RELX, didn’t do it
It had truly been sitting on my purchase checklist since June final yr however, stupidly, I’d by no means bought round to purchasing it.
Again then, the share worth stood at 2,646p. By final November, it had climbed 15% to three,055p. Right now, I’d must pay 3,719p per share. That’s a rise of one other 21.7% over the yr. Over 5 years, the RELX share worth is up 97.98%. So I’m nonetheless kicking myself.
So what stopped me shopping for RELX? It all the time seemed so dear, buying and selling at round 30 occasions earnings. On the time, I used to be on a FTSE 100 discount hunt, mopping up dust low-cost dividend shares with valuations nearer to 5 or 6 occasions earnings. However RELX has taught me {that a} excessive yield and low price-to-earnings ratio isn’t every thing.
Its shares are nonetheless costly right now, buying and selling at 32.65 occasions earnings with a comparatively meagre trailing yield 1.54%. That’s higher than it appears to be like although, as a result of the board has a robust observe file of dividend progress. In July, it hiked the interim dividend by 7%, for instance.
A buying and selling replace on 24 October reported that underlying revenues had grown 7% for the primary 9 months of the monetary yr, with constructive momentum throughout the group. The board anticipates one other yr of sturdy underlying income and adjusted working revenue progress.
I can purchase this progress inventory in December
On 8 November, JP Morgan Cazenove lifted its share worth goal for RELX from 4,200p to 4,550p, as its Authorized and STM (scientific, technical & medical) seemed set to take pleasure in AI-powered progress.
In whole, 11 analysts comply with RELX and so they provide a decrease median one-year share worth forecast of 4,023p. That’s up 7.97% from right now. JP Morgan’s is among the more moderen and suggests progress of twenty-two.2%.
As but, we don’t know for positive whether or not AI will show the nice game-changer. Anybody who has performed round with chatGPT software program has discovered it has limitations, and can’t be relied upon for 100% accuracy. Or anyplace close to.
Plus its fortunes are nonetheless tied to the financial cycle. These are unsure occasions as inflation proves sticky and gross sales might take successful if sectors akin to authorized or monetary companies battle.
However with RELX rising strongly, together with via acquisitions, and launching common share buybacks I feel it appears to be like nicely set for 2025 too.
Now this time I plan to behave on that and purchase it. If it’s not the perfect FTSE 100 share for me to purchase right now, it’s not far off.
