Stock of the Week: Relx
Graham Spooner, investment research analyst at The Share Centre, picks multinational information and analytics company, Relx, as stock of the week.
This week’s share of the week is the Anglo-Dutch publisher and information provider, Relx. The group specialises in educational and scientific publications and exhibitions and their range includes the LexisNexis products.
It recently underwent a restructuring programme, the majority of which is now over. These changes have moved the group away from its core trade journals base into one providing digital professional information services to doctors, lawyers and academics, along with exhibitions such as the London Book Fair.
Relx is currently understood to be among a number of suitors expected to take part in an auction of the Times Higher Education. With previous acquisitions being viewed positively by the market, it’s worth investors keeping an eye on any M&A activity.
An update in October reiterated guidance for the year, after reporting a 4% rise in revenue for the first nine months. Management are also confident on delivering another year of underlying growth in revenue and adjusted operating profit.
There has been solid like-for-like growth across all of its divisions and an improvement in margins. Of its divisions, Risk Solutions, which provides information to help prevent and spot fraud, has demonstrated the best growth.
Overall, the share price has made impressive progress over the last five years and has outperformed since our upgrade earlier in the year. In these volatile times the group has defensive attractions and therefore we rate the stock as a low to medium risk ‘buy’ for a balanced portfolio.