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Our monthly Fire Best Buys Now are designed to highlight our team’s three favourite, most timely Buys from our growing list of growth-focused Fire recommendations, to help Fools build out their portfolios.
“Best Buys Now” Pick #1:
Pearson (LSE:PSON)
- A former diversified publishing giant that has repositioned itself as a pureplay education business.
- A recent trading update showed sales improving by 5% for the full year, with growth spurred by its assessment and qualifications business.
- Adjusted operating profits are expected to arrive at £570-£575m, a 30% increase, due to both sales growth and cost savings.
- Potentially, its assessment and qualifications business could see a tailwind if people need to reskill to meet future labour needs in the face of technological changes.
- While artificial intelligence might pose a threat to Pearson’s business, the company feels that its education products can be “enhanced” by AI.
- Moreover, in our view it’s unlikely educators – who trust Pearson to help its students achieve the best outcomes – will quickly embrace unproven technologies at the expense of a trusted provider like Pearson. This gives Pearson a chance to implement its own tools (a chatbot is currently in beta).
- For now, as when the company was first recommended, we think net technologies present a compelling opportunity for Pearson.
