1 FTSE 100 growth stock I’d buy in July

Pearson plc (LON:PSON) stock has struggled in the latter half of this decade, but the company has made promising strides into 2019.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

sdf

Pearson (LSE: PSON) is a London-based multinational publishing and education company. Pearson was a high-performing growth stock for the first half of this decade, but suffered its sharpest decline since 1987 in the fall of 2015. This was primarily due to a drop in its profit forecast as the company reoriented its focus on the global education market.

Pearson plunged to a 10-year low in late 2017 but has since been on a promising two-year rebound. This was derailed early this year after the company slashed its United States Higher Education Courseware (HECW) revenue forecast. Students in the US have moved to second-hand textbooks and web materials over pricier options. New textbooks carry an especially high price tag.

Last year Pearson looked like a solid option for growth investors, but it stalled in the second half of the year. Investors should not let its early January setback drive them away from the stock. Pearson offers nice value as investors kick off the summer of 2019. Today I am going to examine some of the reasons why I’m bullish on Pearson.

Should you invest £1,000 in Bunzl Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Bunzl Plc made the list?

See the 6 stocks

The company’s reorientation into the global education market has seen it pitch off publications like The Economist and Financial Times. In the education sector Pearson possesses a narrow moat, but the growth of this market is worth getting excited about. Access to education is ballooning, and the adoption of consumer electronics around the world is allowing for a significant shift to unconventional learning methods.

A 2018 report from market research firm Grand View Research projected that the smart education and learning market would be worth USD $423.2 billion by 2025. This represents a compound annual growth rate (of 15.2% over the forecast period; 2018 to 2025. Awareness of new learning modules and a lack of resources in developing regions are two major barriers that may limit market growth going forward. Those hurdles aside, the global education market is poised for huge growth over the next decade. Global Market Insights, another top market research firm, projects that the e-learning market will surpass USD $300 billion by 2025.

Pearson is off to a good start in 2019. The company released its first quarter 2019 results on 26 April. Its North American business posted 2% sales growth. This bolstered overall revenue, which also moved up 2% from the prior year. The North American business saw improvement due to growth in online programme management, virtual schools, and professional certification. However, US HECW has continued to be a drag on earnings.

The company is set to launch a suite of digital products and capabilities ahead of the 2019 school season. These include an AI-powered maths tutor mobile app and an AI-powered essay market.

Shares of Pearson threatened technically oversold territory in early June but have since rebounded. This should be viewed as a long-term target for growth investors, which is why I’m zeroing-in on the stock in July. The company has shown marked improvement in recent quarters and the education sector is primed for substantial growth in the coming years.

AI Revolution Awaits: Uncover Top Stock Picks for Massive Potential Gains!

Buckle up because we're about to dive headfirst into the electrifying world of AI.

Imagine this: you make a single savvy investment in some cutting-edge technology, then kick back and watch as it revolutionises entire industries and potentially even lines your pockets.

If the mere thought of riding this AI wave excites you and the prospect of massive potential returns gets your pulse racing, then you’ve got to check out this Motley Fool Share Advisor report – 'AI Front Runners: 3 Surprising Stocks Riding The AI Wave’!

And here’s the kicker – we’re giving you an exclusive peek at ONE of these top AI stock picks, absolutely free! How’s that for a bit of brilliance?

Get your free AI stock pick

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Ambrose has no position in any of the shares mentioned. The Motley Fool UK has recommended Pearson. 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.

More on Investing Articles

This way, That way, The other way - pointing in different directions
Investing Articles

Prediction: in 12 months the under-achieving Legal & General Group share price could turn £10k into…

Harvey Jones expected better from the Legal & General share price, but he has no complaints about the FTSE 100…

Read more »

UK financial background: share prices and stock graph overlaid on an image of the Union Jack
Investing Articles

See the latest BP share price and dividend forecasts

Harvey Jones examines the outlook for the BP share price after what's been a tough year. The yield's climbed nicely…

Read more »

A GlaxoSmithKline scientist uses a microscope
Investing Articles

What are the most common FTSE 100 shares top UK investors put into a Stocks and Shares ISA?

Mark Hartley reveals the three most popular FTSE 100 shares found in Stocks and Shares ISAs — and why so…

Read more »

Mature black woman at home texting on her cell phone while sitting on the couch
Investing Articles

£10,000 invested in Greggs shares would deliver this much passive income…

Dr James Fox takes a closer look at Greggs' shares. He hasn't been a fan of the sausage roll maker…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

11% below its highs, this world-class FTSE 100 tech stock looks good value to me

Looking for a tech stock in the FTSE? This company is now one of the biggest financial data companies in…

Read more »

British Asian mother and young children enjoying exercise
Investing Articles

Here’s how my 1 year-old daughter’s SIPP could be worth almost £19m in 60 years

The SIPP provides Britons with a way to manage their retirement planning. Plus, you can open a SIPP at any…

Read more »

A person holding onto a fan of twenty pound notes
Investing Articles

Consider 2 investment trusts and funds to target £160k from a £20k lump sum!

I think these investment trusts and ETFs could continue delivering double-digit annual returns through to 2035. Here's why.

Read more »

Shot of an young mixed-race woman using her cellphone while out cycling through the city
Investing Articles

How investors can aim to get rich and retire early by following Warren Buffett

Warren Buffett is an exceptionally successful investor, who has leveraged his knowledge and the power of compounding to create great…

Read more »