My top FTSE 100 growth stock to buy in September

Stephen Wright thinks Experian’s lagging share price is a great opportunity to add a top FTSE 100 growth stock to his portfolio for the long term.

| 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.

Young Caucasian woman with pink her studying from her laptop screen

Image source: Getty Images

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

In general, 2023 has seen something of a growth stock rally. Investment platform Vanguard’s growth index is up 36% since January, compared to a 3% gain for its value index.

The rally in growth stocks makes it difficult to find shares trading at attractive prices. But there’s one exception in particular that’s catching my eye at the moment.

Experian

Experian (LSE:EXPN) has largely sat out the recent rally in growth stocks. The company’s share price is down 2% since the start of the year.

Should you invest £1,000 in Experian 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 Experian Plc made the list?

See the 6 stocks

Created with Highcharts 11.4.3Experian Plc PriceZoom1M3M6MYTD1Y5Y10YALL3 Sep 20183 Sep 2023Zoom ▾Jan '19Jul '19Jan '20Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '232019201920202020202120212022202220232023www.fool.co.uk

To an extent, this makes sense. The business is a credit bureau, which means that demand for its services is likely to fall when higher interest rates make debt more expensive.

Despite this, Experian has proved fairly resilient. At its most recent update, management reported 5% revenue growth during the second quarter of 2023.

On top of that, the business has some attractive long-term characteristics. This is why I see the short-term weakness in the share price as a buying opportunity.

Geography

As a FTSE 100 company, it’s easy to attribute the struggling share price to a difficult UK macroeconomic environment. And while there’s some truth here, I think this is a mistake.

It’s worth noting that the UK only accounts for around 12% of the company’s revenues. The firm has much more exposure to the US economy, where 67% of sales come from. 

With inflation around 3% (vs 6.8% in the UK), the US appears to be nearing the end of its interest rate increases. This helps explain why Experian’s business is holding up well.

I’m expecting this to continue. And if it does, this should be positive for the company’s share price, making this a good time to buy the stock.

Growth

Experian shares clearly aren’t cheap. But the company is a growth stock, so where is the growth going to come from?

I think there are four main avenues – one first is organic growth, another is acquisitions, and a third is share buybacks. The most significant though, is expansion.

Over the last few years, Experian has been working to establish its presence in Latin America. That part of the business currently brings in 15% of the company’s revenues.

More importantly, revenues from this part of the business are growing at 13%. There’s a potential big market for the company, which is where I see the growth coming from.

Should I buy?

Despite a slow 2023, Experian’s shares don’t look obviously cheap. The stock still trades at a price-to-earnings (P/E) ratio of 40.

Buying a stock at that level is a risk. The growth the market is expecting needs to come through, or the investment could turn out badly.

I think there’s a good opportunity here though. If the company grows its earnings at 10% a year, today’s price will represent a P/E ratio of 16 by 2033. 

Growth investors need to be willing to wait for earnings to develop, but I think Experian will reward patience. That’s why I’m looking to buy the stock this month. 

Should you invest £1,000 in Experian 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 Experian Plc made the list?

See the 6 stocks

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.

Stephen Wright 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.

More on Investing Articles

Thoughtful man using his phone while riding on a train and looking through the window
Investing Articles

Up another 6% in the last week! Is the BP share price ready to go gangbusters?

The BP share price has been on fire lately. Harvey Jones looks at what's driving the FTSE 100 stock's recovery,…

Read more »

Businessman using pen drawing line for increasing arrow from 2024 to 2025
Investing Articles

High-flying IAG shares are up 50% in 3 months but I still think they’re too cheap to ignore!

Timing the market is almost impossible but Harvey Jones managed it when buying IAG shares in April. Can the FTSE…

Read more »

ISA coins
Investing Articles

Want to earn £1k+ in annual passive income from a £20k Stocks and Shares ISA? Consider this!

Our writer sets out some points to consider when trying to target a four-figure income from one year's Stocks and…

Read more »

Rolls-Royce's Pearl 10X engine series
Investing Articles

3 risks to the Rolls-Royce share price, after its 979% climb

After a 979% growth in the Rolls-Royce share price, our writer still sees things to like in the business. But…

Read more »

Buffett at the BRK AGM
Investing Articles

Can Warren Buffett principles help when looking for AI stocks to buy?

Billionaire Warren Buffett has made a fortune by applying old investing principles to new industries. Can our writer learn some…

Read more »

Portrait of a boy with the map of the world painted on his face.
Investing Articles

Up 36% in 3 months! Is my nightmare purchase of Glencore shares about to come good with a vengeance?

When Harvey Jones bought Glencore shares two years ago, he didn't expect to find himself sitting on a 45% loss.…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

£1,000 invested in Lloyds shares 5 years ago is now worth…

Anyone who’s owned Lloyds shares over the last five years is probably laughing right now with impressive returns that crushed…

Read more »

A mature woman help a senior woman out of a car as she takes her to the shops.
Investing Articles

If a 50-year-old puts £500 a month into a SIPP, here’s what they could have by retirement

Investing £500 a month with a SIPP could build a pension pot worth £269,900 or quite a bit more over…

Read more »