Investors on the hunt for the best share to buy during today’s market turmoil should consider taking a peep at FTSE 100-listed Experian (LSE: EXPN). The global credit data giant’s a truly world-class stock but recent turbulence has knocked its share price.
This could be an opportunity to take a position in one of the UK most exciting growth stocks, at a slightly reduced price.
Experian has delivered heaps of solid share price gains with the promise of more to come. That was until last month, when the share price suddenly dropped 12%.
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Can the Experian share price bounce back?
Market concerns over trade tariffs and a potential US recession have hit sentiment hard. Over one year, Experian’s share price is up just 4%. However, but over five years, it’s climbed nearly 50%.
I wouldn’t call the stock cheap. Despite the dip, its price-to-earnings (P/E) ratio’s still over 30. While we could face more volatility as the world adjusts to Donald Trump, I think far-sighted investors could turn this to their advantage. I’m not the only one.
Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club, has just highlighted Experian as a “durable, adaptable and above all resilient” stock.
Experian aggregates credit data from banks, lenders and businesses worldwide, then sells it back to them to assess creditworthiness and manage risk.
Huggins says: “This helps over 180 million consumers take control of their finances and supports 150,000 businesses with lending decisions, fraud detection and efficiency improvements. In the US, it even assists hospitals with payment management.”
He notes Experian invests heavily in innovation, highlighting its insurance marketplace, analytics tools and software. These are only just rolling out but have the potential to “meaningfully accelerate Experian’s growth over the next decade”.
Huggins adds: “It’s why I’ve never been so excited by its long-term prospects.”
Solid recent results but markets have shifted
Experian’s Q3 results, released on 15 January were solid with revenues for the three months to 31 December up 6%. Analysts expect it to rise 7% over the full year to $7.53bn.
But the results also highlight why Experian’s struggling at the moment, as it generates 68% of its revenues from North America. These are now threatened by trade war concerns, along with fears of a wider global slowdown. Experian’s high valuation means it’s particularly vulnerable to shifts in market sentiment.
So is Experian a buy to consider today? Broker forecasts suggest that’s the case. The 14 analysts offering one-year share price forecasts have produced a median target of 4,283p. If correct, that’s an increase of more than 22% from today. There’s a modest 1.5% dividend yield too.
Those forecasts will mostly predate the recent dip, so should be treated with caution. However, for long-term investors who can stomach short-term volatility, Experian’s global reach, resilience and innovation make it a stock well worth considering. It may not be the single very best share to buy now, but it makes a strong case for itself.
