The share price of FTSE 100 stock and credit checker Experian (LSE: EXPN) was in fine form this morning. In fact, it’s now getting very close to setting a fresh all-time high. What’s behind this momentum and is it too late to buy in?

FTSE 100 top riser

Answering the first question isn’t all that difficult. Earlier today, the self-styled ‘global information services company’ released an encouraging update on trading.

Thanks to a quicker-than-expected recovery from the pandemic, total revenue grew 28% over the three months to the end of June once foreign currency movements were stripped out.  

Although the FTSE 100 firm did well in all regions, this was particularly evident in Europe, the Middle East, and Africa/Asia Pacific. Collectively, total revenue jumped 61% here. That said, it’s important to bear in mind that these markets were hit hard over the same period last year so a big number wasn’t a complete surprise. Moreover, this region still contributes a relatively small proportion to Experian’s total revenue. 

Elsewhere, more established markets, such as the US, were also performing well. Overall revenue growth of 26% was recorded across the pond following a “significant uplift” in its credit comparison marketplace. It would seem many consumers are wanting to take advantage of credit card companies becoming a little more flexible with their lending criteria. In line with the huge demand seen for cars recently, the company also said that its automotive insurance comparison marketplace was “expanding rapidly“.

In the UK, Experian said that it “returned firmly to growth” following its transformation programme.  

So, would I buy this growth stock today?

I think there could be reasons both for me to buy and to not buy the FTSE 100 stock today.

Reasons to make me think twice include the definitely-not-cheap valuation. Before markets opened this morning, Experian was trading at 31 times forecast earnings. This certainly doesn’t mean the shares won’t climb higher from here. However, it does suggest to me that a lot of good news is already reflected in the price. The risk here is that Experian disappoints at some point down the line and leaves my holding ‘underwater’.

Even if this doesn’t happen, some investors may choose to recycle profits made over the last 18 months or so into stocks offering more value. This could conceivably have an impact on the share price for a while. 

On the other hand, Experian’s outlook continues to be promising. Following today’s numbers, the company announced that it now expects revenue to grow between 13% and 15% in this financial year. Organic growth — that generated internally rather than through acquiring other businesses — is likely to come in between 9% and 11%. Couple this with consistently high profit margins and there’s definitely still reasons for me to be bullish on this FTSE 100 stock.

Bottom line

There’s no doubt in my mind that Experian is a high-quality company. It’s also one I think I could comfortably hold for years within my own portfolio. So, on balance, I’d be more inclined than not to buy this stock today. This is even though the price may soon hit a new record high. 

Paraphrasing star UK fund manager Terry Smith, it’s what companies do over the years that really has an impact on investor returns, not market timing. Sometimes, I think it’s wise just to pay up. 

The post This FTSE 100 stock could be about to hit an all-time high! Should I buy? appeared first on The Twelfth Magpie.

More reading

• Here’s how £10 a day invested in the stock market can cut down retirement age by 5 years
• If Experian is such a great FTSE 100 stock, why are its shares down a third?
• Prediction: 2 FTSE shares that could outperform the S&P 500 between now and 2030
• The ISA strategy that could quietly turn small sums into life-changing wealth

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Experian. 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 have typically seen Bunzl as one of the best growth shares to buy, but today’s 3.9% yield makes it look like a tempting income stock too. The pandemic interrupted its proud record of dividend growth, but management quickly resumed shareholder payouts.

You won’t find Bunzl’s products or services in the shops, and I suspect many private investors overlook its potential as a result. It sells groceries, food services, safety wear and cleaning products to companies, allowing them to cut costs, free up working capital, and simplify admin.

One of the best shares to buy now?

The Bunzl share price enjoyed an initial lift from the pandemic, because it also supplies ‘healthcare consumables’, including sanitisers, gloves and face shields. Covid-19 related orders totalled around £550m last year.

If vaccines see off Covid, this demand may fade. This is a worry (for Bunzl) since sales of other products and services fell 5%. On the other hand, these may enjoy a revival if lockdowns ease. It seems to win either way. That is another reason why I see this is one of the best shares right now, and would buy despite current uncertainties.

After excluding larger Covid-19 related orders, the group still expects a “moderate decline” in second-half organic revenue growth. 

So why do I still think this is a great to buy now? I think Bunzl’s acquisition-led global growth strategy is a winner. It offers global diversification, strong cash flows and a robust balance sheet. Today’s low entry valuation is too tempting for this long-term fan to ignore.

I’m also a fan of global information services company Experian (LSE: EXPN), it is expensive trading at a thumping 37.2 earnings. I still think it is one of the best shares on the FTSE 100, but would be reluctant to buy today.

This FTSE 100 stock is a bit pricey

The Experian share price has more than doubled over five years. It has been climbing in recent months, after posting a 14% jump in annual profits to $1.08bn, despite Covid. Statutory revenue edged up 4% to $5.37bn.

Banks worldwide rely on Experian’s massive consumer database to make lending decisions, and around 90% renew their contracts each year. It has two large rivals in Equifax and TransUnion, but high barriers to entry will deter others, maintaining pricing power.

Experian could take a hit if the pandemic drags on or property prices crash, and demand for credit falls. While I don’t see that as a major threat, it may not be the best share to buy at at today’s pricey valuation. I would rather pop it on my watch list and buy if it dips.

The post Best shares to buy! This FTSE 100 stock is too cheap to ignore appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Bunzl and Experian. 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.

Train is best known as being one half of the successful Lindsell Train fund manager partnership, along with Michael Lindsell. He also runs one of the most successful investment trusts in the equity income sector, Finsbury Growth & Income Trust. This has returned 55% in the last five years, mostly from FTSE 100 stocks, against just 1.3% across its benchmark.

Last week, Train announced a new holding, data and credit-checking specialist Experian (LSE: EXPN). This is the third new position he has initiated in the last year, “an unusually high rate of actionable new ideas for Lindsell Train!”. This from a man who views Warren Buffett’s famous saying “our favourite holding period is forever” as alarmingly short-termist. 

Train dives into the Experian share price

Train says FTSE 100 stocks have underperformed for some time, and this is throwing up some great opportunities. I happen to agree with him.

Interestingly, he says he’s been criticised for owning too many “expensive growth companies”, leaving his fund vulnerable if value or cyclical stocks outperform. After Covid-19, he thinks the reverse is the case, and he needs to hold more expensive growth companies. That’s exactly what Experian is. 

Right now, the Experian share price trades at a pricey 37.63 times earnings. That fact alone would be enough to put many investors off. However, there’s a reason for that. The Experian share price is up a whopping 169% over the past five years, at a time when the FTSE 100 fell around 10%.

While it crashed in March along with most other FTSE 100 stocks, it has staged an impressive recovery, climbing 57% since the low point of 23 March. Experian may be an expensive growth company but, for a moment or two back there, it was relatively cheap. That’s why we always urge Fool users to buy top FTSE 100 stocks in the middle of a crash.

I’d buy this expensive FTSE 100 stock

Train was persuaded to buy Experian by colleague Madeline Wright, who said it offers exposure to a world-class technology company that owns “rich, unique and valuable data”. Train says its reports are critical to the credit-granting decision process, and its customers (mostly banks) have a 90% renewal rate.

The cost per report is low at just one or two dollars, so there’s little incentive for either the big three credit agencies to launch a price war, or for a fourth player to enter. In any case, assembling the data will take them too long.

Train says the biggest risk is a data security breach, but points out that Equifax rival suffered one, and got through it in decent shape. Experian is a top FTSE 100 growth stock. One shouldn’t expect much income, as its current dividend yield is just 1.2%. It’s expensive, but that’s often the case with top technology stocks like this one.

The post Ace fund manager Nick Train has bought this top FTSE 100 stock. I’d buy it too appeared first on The Twelfth Magpie.

More reading

• Here’s how £10 a day invested in the stock market can cut down retirement age by 5 years
• If Experian is such a great FTSE 100 stock, why are its shares down a third?
• Prediction: 2 FTSE shares that could outperform the S&P 500 between now and 2030
• The ISA strategy that could quietly turn small sums into life-changing wealth

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Experian. 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 have picked out three FTSE 100 dividend stocks whose payouts are covered at least twice by earnings. That is a sign they may be sustainable.

Consumer goods group Reckitt Benckiser Group (LSE: RB) has lived up to its reputation for being a defensive stock. After falling in the initial sell off, its share price bounced back strongly. It now trades an impressive 20% higher than a year ago when we’d never heard of Covid-19.

Three dividend income stocks I’d buy

It’s actually benefited, as this has increased demand for cleaning and pain relief products, boosting its health and hygiene operations. Dettol was a particularly big seller. First-half pre-tax profit rose £100m to £1.4bn, up 7.7%, with net revenue up 10.8% to £6.9bn. Other areas floundered, as the recently-acquired baby formula business stubbornly refuses to grow. 

Reckitt Benckiser doesn’t offer a massive yield, just 1.9%. However, management has been progressive, so you can expect growth in future. Cover currently stands at exactly 2.0, which is comforting. It’s one of my favourite income stocks, and not just for the dividends.

Data and credit-checking specialist Experian (LSE: EXPN) is another FTSE 100 income stock with a solid dividend, covered 2.1 times by earnings. It’s also one of the most spectacularly successful growth stocks on the index, up 176% over five years. The pandemic has done little to slow its progress. Experian is also up 20% measured over the last year.

Experian saw trading grow strongly in July and August. As a result, it has hiked its second-quarter revenue expectations to between 3% and 5%. Its US mortgage arm has done particularly well, as the business shows its “naturally resilient” qualities.

As FTSE 100 dividend stocks go, the yield is relatively low at 1.21%. But that’s partly down to its runaway share price success. Experian is now valued at almost 40 times earnings as a result. This is expensive, but also shows how highly investors rate it. You might prefer to buy if we get another stock market crash, when it may be cheaper for a while.

Aim to hold for the long term

My last well-covered FTSE 100 dividend stock is a long-term favourite of mine, distribution and outsourcing group Bunzl (LSE: BNZL). Again, the yield is relatively low at 2.04%, but cover is super strong at 2.6 times earnings.

After the usual March dip, Bunzl’s comeback has been staggering, with the stock soaring more than 50% over six months. It did scrap its dividend in April, but quickly brought it back as demand for personal protective equipment boosted profits. This should offer some ballast if slowing economic growth hits demand elsewhere in the business.

I reckon these three well-covered FTSE 100 dividend stocks merit a closer look. The businesses have solid long-term prospects and I’d aim to buy and hold them for years after the pandemic has passed.

The post 3 well-covered FTSE 100 dividend stocks that I’d buy and hold forever appeared first on The Twelfth Magpie.

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• If Experian is such a great FTSE 100 stock, why are its shares down a third?

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Experian. 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.

InterContinental Hotels Group

InterContinental Hotels Group (LSE: IHG) is a FTSE 100 top performer, up 123% in the past five years. It has absolutely crushed the index, which rose just 13% over the same period.

However, the hotel trade is plugged into the global economy, and can suffer in a slowdown, when personal and business travel demand slumps. The stock is down around 3% today after a Q3 trading update shows a 0.8% drop in the all-important revenue per available room (RevPAR) figure, due to “tougher trading conditions in the US and China, and ongoing unrest in the Hong Kong”.

However, CEO Keith Barr said the group still managed to deliver “a 4.7% increase in net system size despite a strong comparable”, and he expects this to accelerate in the coming quarter, with industry-leading growth over the medium term.

InterContinental Hotels has changed its business model, away from the capital-intensive job of actually owning hotels, franchising them out instead, which should boost profitability and cash conversion, benefiting shareholders.

Today the group said it has received the first franchise applications for its “upper midscale brand” Atwell Suites, and strengthened its loyalty offer through an exclusive partnership with luxury and boutique travel club Mr & Mrs Smith. This end of the market could offer recession-proofing.

My one concern is that even after today’s drop, the £8.3bn group looks a little expensive trading at 19.6 times forward earnings, while the 2.1% forward yield underwhelms, although it does have cover of 2.5. It has posted four consecutive years of double-digit earnings growth, but this may slow slightly with analysts predicting 5% this year and 8% next. It still looks a lot more solid than most stocks on the index right now, though.

Experian

You don’t find many companies much sturdier than data specialists Experian (LSE: EXPN) these days. Its share price is up a thumping 156% measured over five years, and 33% over the last 12 months, destroying the index.

The £21.6bn group’s data helps global businesses gauge lending risk and fight fraud, and it has a strong presence in 40 countries including the UK, US, Brazil, India, Australia and Colombia. Some 80% of its revenues come from business-to-business customers.

It continues to expand globally and win hundreds of thousands of new customers, while Q1 figures showed 7% total revenue growth at constant exchange rates, 4% at actual rates.

The big hurdle when approaching this success story is whether you can stand the current valuation, currently a whopping 30 times forecast earnings, and a PEG of 4.7. As is often the case, you have to pay for success.

The yield is well below the FTSE 100 average of 4.7%, at just 2.1%, although cover of 2.5 gives scope for progression. Operating margins of 24.1% impress, as does a stonking return on capital employed of 766%. Forecast earnings growth looks steady too. Experian looks reassuringly expensive.

The post Forget gold and the Cash ISA. I’d buy these 2 FTSE 100 growth stocks that are thrashing the index appeared first on The Twelfth Magpie.

More reading

• Here’s how £10 a day invested in the stock market can cut down retirement age by 5 years
• If Experian is such a great FTSE 100 stock, why are its shares down a third?
• Prediction: 2 FTSE shares that could outperform the S&P 500 between now and 2030
• The ISA strategy that could quietly turn small sums into life-changing wealth

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Experian and InterContinental Hotels Group. 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.

A few years ago, it looked as if Astra was on the rocks. Patent expirations were weighing on earnings, and the company was struggling to find new treatments to fill its pipeline.

However, over the past three or four years, management has wholly reinvigorated the group. A relentless focus on finding new pharmaceutical products is starting to pay off, and the company is expected to return to growth in 2019 after several years of falling earnings. 

At the end of July, Astra reported its fourth successive quarter of rising revenues with sales increasing 19% to $5.7bn. Most of this growth is from new treatments. 

Management expects five of these treatments to reach blockbuster status in 2019, which means they will generate more than $1bn. CEO Pascal Soriot has described this as a “remarkable” performance for the company. 

Dividend growth

Astra is already a dividend champion, but this earnings growth suggests shareholders are in line for even bigger distributions going forward.

At present, the stock yields 3.2%, and the payout is covered 1.3 times by earnings per share. Cover is expected to hit 1.6 next year as earnings expand further, and I would expect Astra to make the most of this and increase its distribution to investors further. 

Another FTSE 100 dividend stock that I think could be a great addition to your portfolio today is Coca-Cola HBC AG (LSE: CCH).

Global partner

This is one of Coca-Cola’s major bottling partners, and the agreement with the drinks company gives the business a virtually guaranteed income stream. 

As a result, I think the dividend outlook for this firm is bright. While the stock might not offer the highest yield around (it currently yields 2.2%) the distribution is covered 2.3 times by earnings per share. It also has an impressive track record of dividend growth. 

Coca-Cola’s earnings per share have grown at a compound annual rate of 14% over the past six years as the business has branched out into new markets and improved operational efficiency. 

Earnings growth has allowed management to increase the dividend by an average of 10% every year, and I expect this trend to continue, given Coca-Cola’s market-leading position and track record of improving profit margins.

Market leader

The final FTSE 100 dividend stock that I would buy and hold forever is data giant Experian (LSE: EXPN).

Experian manages data that helps businesses and organisations to lend and prevent fraud.

In the world of data, bigger is always better. The more data you have, the better the service. And when it comes to data gathering, Experian has been a leader in the field since 2006, giving the firm a tremendous edge over its competitors.

As Experian has capitalised on its market position to grow, the dividend has grown at a compound annual rate of 5.1% over the past six years. The yield stands at 1.6% right now, but it’s covered 2.2 times by earnings per share, which gives plenty of room for growth going forward. 

The one downside is Experian’s premium valuation. The stock is trading at a forward price-to-earnings of 27 right now, but I think this is a price worth paying for such a world-leading business. 

The post I’d buy and hold these 3 FTSE 100 dividend growth shares for life appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended AstraZeneca and Experian. 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.

Retail revenue over the 13 weeks to 29 June came in at £498m — 4% higher than the same period in 2018 and double what some analysts were expecting.

A particularly strong performance was seen in China where sales grew by a mid-teen percentage. Recent pressure on the pound also prompted visitors to the UK to splash the cash. 

Perhaps the most important aspect of today’s update for holders, however, was news the new collections from designer Riccardo Tisci had delivered “strong double-digit percentage growth” compared to the previous year. Importantly, Burberry also stated that this quarter was the first where the proportion of new product in its stores was “meaningful” (roughly 50%).

Aside from the above, the 163-year-old business remarked it was successfully building “brand heat” as part of its multi-year transformation plan by improving its presence on social media sites such as Instagram and WeChat. Strong press coverage and influencers continuing to“organically endorse” its wares had also benefitted the company.  

Following today’s numbers, management maintained its guidance for the current financial year of “broadly stable” revenue and margins while predicting “a more pronounced weighting of operating profit in H2″ than in the previous financial year, due to a strong first-half comparator in FY19.

All told, this was a very positive update from the £8bn-cap. The only drawback is that the shares are even dearer than they once were.

Before this morning, the stock was already trading on a forecast price-to-earnings (P/E) of 24. That’s not unreasonable for a company of this quality (evidenced by the consistently high returns it makes on the money it invests) but today’s price jump will likely make some prospective buyers more reluctant to pay up. Especially if the value of the pound shows signs of recovering on news of a Brexit breakthrough. 

So long as — like me — you’re in for the long haul, I think Burberry is a top-tier class act and one worth holding in a fully-diversified growth-focused portfolio. 

Checking in

Also providing an update to the market this morning was credit checker Experian (LSE: EXPN). In sharp contrast to Burberry, however, the market greeted this Q1 trading update with a shrug of the shoulders.  

Revenue rose 7% at constant exchange rates over the three months to the end of June. Business in both North and Latin America was particularly strong with each market registering revenue growth of 9%.

Total and organic revenue growth in the UK and Ireland, however, came in flat, which probably explains why shares are down so far today, even if Experian saw no reason to alter its guidance for the year.

Analyst projections of a 24% rise in earnings this year leave the stock trading on a forecast P/E of 29. Regardless of its solid growth prospects, that’s undeniably high.

So, like Burberry, I would only be tempted to begin building a position at this kind of price if I was committed to holding for the long term. Given that the company’s value has already increased by 26% since the start of 2019, I can’t see much more upside over the next few months.

The post Here’s why this FTSE 100 growth stock is rocketing today appeared first on The Twelfth Magpie.

More reading

• Here’s how £10 a day invested in the stock market can cut down retirement age by 5 years
• If Experian is such a great FTSE 100 stock, why are its shares down a third?
• Prediction: 2 FTSE shares that could outperform the S&P 500 between now and 2030
• This FTSE 100 share pays no dividends. Could that change?
• The ISA strategy that could quietly turn small sums into life-changing wealth

Paul Summers owns shares in Burberry. The Motley Fool UK has recommended Burberry and Experian. 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.

While the latter might be easier said than done, here’s three listed businesses I think would make excellent ‘bottom drawer’ candidates for large-cap-focused portfolios.

For the long term 

The amount of data created in the world will only grow and consumer credit checker Experian (LSE: EXPN) looks set to be a huge beneficiary given its services help a wide range of businesses make optimal decisions and prevent fraud. 

Experian’s shares have been in an absolute tear so far in 2019, rising a little under 30% since January. As you might expect, this run of form, combined with the company’s aforementioned potential to continue expanding, makes it an expensive choice for growth-focused investors. The stock currently changes hands for a little under 29 times earnings.

Then again, as the highly successful fund manager Terry Smith regularly argues, price is “not the most important thing” when deciding on an investment to hold for decades. Whether a business generates consistently great returns on the capital it invests is more crucial. Experian has long ticked this box and looks set to continue doing so.

P&O-owner Carnival (LSE: CCL) would be my next pick. As the world’s biggest operator, it looks set to enjoy growing demand for cruises from increasingly active retirees and, perhaps more surprisingly, younger generations too. 

Despite its solid prospects, shares have been struggling of late. The value of the company is down 25% in over the last 12 months.

Only a couple of days ago, the stock slumped after the company reduced its guidance on full-year earnings following the recent ban by the US government on cruises to Cuba. Bookings for its Continental European brands have also been hit by “ongoing geopolitical and macroeconomic headwinds.” Will this matter in 10 years? I doubt it. 

Now trading on a little less than 10 times forecast earnings, Carnival’s stock looks great value. A £25bn-cap juggernaut (or should that be liner?) won’t double in value anytime soon, but this looks a secure long-term bet. 

Perhaps, rather controversially given the recent issues surrounding the suspension of Neil Woodford’s Equity Income Fund, platform provider Hargreaves Lansdown (LSE: HL) would be my third pick. 

Shares are down 17% from the beginning of June following the former star manager’s decision to prevent investors from withdrawing their cash from his flagship fund — one that until recently featured on Hargreaves’s Wealth 50 list.

Right now, the latter is still in damage-limitation mode. It has already waived its 0.45% platform fee on customers’ holdings in Woodford’s fund and urged him to do the same.

Sure, things could get worse before they get better, especially when the fund returns from suspension. But I can’t help feeling this episode will eventually be regarded as a temporary blip and buying opportunity.

A market leader, Hargreaves is frequently lauded by investors for its customer service and looks set to benefit from increased demand as more of us embrace the goal of investing for a better retirement. 

The post 3 FTSE 100 growth stocks I’d tuck away for the next 10 years appeared first on The Twelfth Magpie.

More reading

• Here’s how £10 a day invested in the stock market can cut down retirement age by 5 years
• If Experian is such a great FTSE 100 stock, why are its shares down a third?
• Prediction: 2 FTSE shares that could outperform the S&P 500 between now and 2030
• The ISA strategy that could quietly turn small sums into life-changing wealth

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Carnival, Experian, and Hargreaves Lansdown. 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.

So, if you’ve just begun your investing journey, and don’t know where to start, here are two stocks that I think would make great additions to any starter portfolio. 

The new oil 

Data is the 21st-century economy’s oil, and Experian (LSE: EXPN) is one of the largest data managers in the world. The company, which is best known for its credit rating services, gathers, analyses and distributes data for customers and clients all over the world and has built a reputation for being one of the best in the data business. This reputation is critical in a world where customers are becoming increasingly concerned about who has access to their data and what it is being used for. 

Experian’s data skills are so impressive that City analysts believe new rules on how data is handled will actually benefit the company. For example, following the introduction of new regulations regarding the processing of data in Brazil earlier this year, analysts at investment bank Credit Suisse announced they believe the changes will drive double-digit margin growth in the region for “the foreseeable future,” as Experian takes market share from weaker competitors. 

Considering its market-leading position, I think Experian’s earnings will continue to grow for many years to come, and while shares in the firm might be a tad pricy (they’re dealing at a forward P/E of 28.6) I’m happy to pay a premium to take part in Experian’s global growth story. The stock also supports a dividend yield of 1.8% at the time of writing. 

Investing with management 

My second FTSE 100 pick for a starter portfolio is Glencore (LSE: GLEN). There are two main reasons why I like this company. Firstly, it is one of the world’s leading commodity trading houses. The firm trades everything from coal, oil and gas, to grain, sugar and copper. There’s a good chance you will come into contact with a commodity that’s passed through Glencore’s operations every day.

As the world’s economy continues to grow, demand for commodities will only expand, and that means Glencore’s sales will only expand. At the same time, this company is still majority owned by its founders and managers. This tells me that management has shareholders’ interests in mind, as the decisions they make about the direction of the business will have an impact on their wealth as well as the wealth of outside investors. 

With these two positive tailwinds behind the company, I think it is worth taking advantage of today’s attractive valuation to snap up shares in Glencore. At the time of writing the stock is trading at an attractive P/E of just 10.2 and supports a dividend yield of 5.3%.

The post Investing for the first time? 2 FTSE 100 stocks I’d buy with £2k appeared first on The Twelfth Magpie.

More reading

• Here’s how £10 a day invested in the stock market can cut down retirement age by 5 years
• Down 10% to below £6 now! Here’s why Glencore’s share price looks a bargain to me anywhere under £12.13
• If Experian is such a great FTSE 100 stock, why are its shares down a third?
• Warren Buffett warns on valuations — is market cap-to-GDP flashing a bubble signal again?
• Prediction: 2 FTSE shares that could outperform the S&P 500 between now and 2030

Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Experian. 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.

So can this £20bn FTSE 100 growth hero continue its upwards trajectory? I reckon it can, even though it looks a little pricy today.

Good credit

The credit ratings specialist has just posted 10% organic revenue growth for the fourth quarter, and full-year growth of 9% at constant exchange rates (falling to 6% actual). Earnings per share (EPS) also rose 9% at constant exchange rates (4% actual), from 94.4 US cents to 98 cents per share.

Profit before tax rose 7% to $957m on a statutory basis, based on revenues of $4.9bn, although again, this fell to just 1% at actual exchange rates.

Good year 

CEO Brian Cassin nonetheless hailed “a very good year for Experian”, as it enjoyed “strong and broad-based growth with exciting new offers for consumers and businesses”. 

Experian enjoyed strong growth across all regions but notably in North America and EMEA/Asia Pacific. Its B2B arm posted organic revenue growth of 9% helped by new sources of data and new product innovations, and 6% for its Consumer Services operation. Benchmark EBIT grew 10% at constant exchange rates (5% actual).

The group continues to expand, attracting 600,000 US customers to its new offering Experian Boost, and expanding its presence across Africa by completing the acquisition of Compuscan for $263m.

Experian needs to keep delivering the goods because it currently trades at a thumping valuation of 24.2 times forward earnings, while its shares trade at 5.1 times earnings. That explains today’s relatively muted market response. It met (high) expectations, but didn’t surpass them.

You have to remember that the share price is up almost 30% in the past 12 months, and 104% over five years, against just 6% on the FTSE 100. It will be a challenge maintaining that pace. However, management said it should continue to grow in the new financial year, at an underlying rate of between 6% and 8%. As Rupert Hargreaves has pointed out, EPS have grown at a compound annual rate of 29% since 2013.

Nice return

Return on capital continues to be strong at 15.9%, up 40 basis points on last year’s 15.5%. Experian is vulnerable to an economic slowdown, as demand for credit checks tends to rise when people are feeling buoyant and looking to buy homes and borrow money. So that is one potential headwind, although a slowdown is a challenge to almost every company.

Another thing I like is that the group does not require massive expenditure, because the business is driven by data and doesn’t need, say, heavy plant and infrastructure. It enjoys a stonking 311.6% return on capital employed.

Progressive values

At first sight, the yield disappoints, currently a forecast 1.8%. However, that is partly due to the strong share price performance. Cover is 2.2, and today management announced a 4% rise in the total full-year dividend  to 46.5 US cents per share. It is also pursuing a $400m share repurchase programme. I’d buy.

I’m happy to say I praised Experian earlier this year, along with another FTSE 100 company you might also consider buying.

The post This top growth stock is absolutely thrashing the FTSE 100. Would I buy? appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Experian. 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.