A growth stock that excites me right now is Experian (LSE: EXPN). Here’s why I like the look of it.
Information services
Experian is a global business and information services company. Operating in four main areas, Credit Services, Decision Analytics, Marketing Solutions, and Interactive, it is best known for its credit checking operations. This is one of its services I have used personally for many years now. This allows consumers to check and keep track of their credit scores.
Let’s take a look at Experian’s share price activity. As I write, the shares are trading for 2,856p. At this time last year, they were trading for 2,939p, which is a 2% drop over a 12-month period.
Why I like this growth stock
To start with, I’m buoyed by Experian’s dominant market position in a world changing due to the digital revolution. I believe demand for its data-driven products will rise as the world continues to rely on digital solutions. This rise could translate into future earnings.
Next, I believe that Experian possesses defensive traits too, as some of its services are essential. This is because businesses across many industries globally rely on Experian for identity, credit, and fraud checks. This defensive nature should help boost future earnings as well as potential share price growth and investor returns.
Moving onto growth, I believe Experian could experience great growth through opportunities in the Latin American market. This region in particular is currently undertaking major upgrades to its financial services market and infrastructure. Experian could help and play a part through its offering. It already has a presence here and expects it to grow.
Finally, Experian shares would also boost my passive income currently through dividends. A dividend yield of 1.5% may seem modest right now, but I believe this will increase in the future. However, I am aware that dividends are never guaranteed.
Risks and what I’m doing now
Despite my bullish stance on Experian as a growth stock, there are risks to note too. Firstly, when any issues occur in the banking sector, like recently in the US, the shares can pull back as demand for some of its services may be deemed non-essential. Although this is not the case for all of Experian’s services, it is worth noting that Experian is the largest credit bureau in the US. Any downturn in the banking sector could impact performance and returns.
Furthermore, if Experian were to experience any type of data breach or technical issues, this could dampen performance and investor sentiment. This is a noteworthy risk for nearly all firms that rely on tech and hold sensitive customer data.
Overall I’m buoyed by Experian and feel it is a great growth stock with lots of potential ahead. In addition to this, it is already well established with deep rooted relationships and a great reputation. I’d be willing to add some shares to my holdings when I have the spare cash to invest.
The post Here’s a growth stock I want to buy with defensive traits! appeared first on The Motley Fool UK.
Pound coins for sale — 51 pence?
This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!
Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.
What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?
See the full investment case
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Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has recommended Experian Plc. 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.
