1 FTSE 100 share I’d buy like there’s no tomorrow

Despite the market’s strong start to 2023, I still see a compelling growth opportunity in this FTSE 100 share. Here’s why I’d snap it up today.

| 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.

Middle-aged black male working at home desk

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.

The UK blue-chip index continues its march towards an all-time high. A 4% rally since the start of 2023 has the Footsie flirting with its record high of 7,903 points, set back in May 2018. Despite this, one FTSE 100 share in particular still looks good value to me over the long term.

Big data and analytics

The London Stock Exchange Group (LSE: LSEG) owns and operates the London Stock Exchange. It also owns several other stock market-related assets, including Refinitiv, Tradeweb, and FTSE Russell. The Group’s current corporate guise was cemented back in 2007 when it merged with Borsa Italiana (the Milan Stock Exchange).

But eyebrows were raised when the company announced it was acquiring data and trading firm Refinitiv in 2019. It paid a hefty $27bn, its largest acquisition to date.

Group CEO David Schwimmer has noted that he advised on hundreds of transactions in his previous role at Goldman Sachs. But he struggles to think of a single one “as transformational and value-creating” as the company’s acquisition of Refinitiv.

Now the second-largest market data provider after Bloomberg, Refinitiv boasts a customer base of 40,000 financial institutions across 190 countries. The London Stock Exchange Group and Refinitiv combining creates a truly world-class operation in terms of scale and comprehensive data offerings.

Though I think the acquisition is a smart one, that’s not to say the huge price tag doesn’t create risks. One is that the company’s net debt now stands at £5.7bn, which represents a ten-fold rise in just five years.

Microsoft partnership

Last year, tech giant Microsoft announced it had taken a 4% stake worth $2bn in the company. For its part, the Group has committed to spending a minimum of $2.8bn with Microsoft on cloud-related services. This will involve significantly upgrading the company’s infrastructure, including the Refinitiv platform.

Many analysts now anticipate that the planned transformation of the Refinitiv platform may well challenge Bloomberg’s market dominance.

As for the stock, it’s currently much cheaper than it’s been in recent years. It now has a forward price-to-earnings (P/E) ratio of 21. In 2021, the P/E stood at 38.

The share price is down 18% over the last two years. One share now costs a little over £74, compared to £98, reached back in February 2021.

IPO pipeline

There was a sharp drop in initial public offerings (IPOs) in the UK last year, due to economic uncertainty caused by the war in Ukraine. But Schwimmer has said there’s a “healthy pipeline” of companies waiting for markets to settle down before going public in London.

Put simply, more IPOs represents more chance for the company to make money.

There are some interesting British companies in this pipeline of potential IPOs. These include craft beer chain Brewdog, and Revolut, the fintech startup hoping to secure a UK banking license. Also, semiconductor giant ARM Holdings is rumoured to be re-listing on the London Stock Exchange.

I’m looking forward to kicking the tyres on these potential investments when the opportunity arises. In the meantime, I’ve also got a healthy pipeline of shares I want to invest in. So I’ve put LSEG stock on my watchlist until I have more capital to deploy. But I expect to own shares sooner rather than later.

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.

Ben McPoland has no position in any of the shares mentioned. The Motley Fool UK has recommended Microsoft. 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

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

Revealed! One of the hottest growth, value, and dividend shares to buy today

This high-dividend, low-cost company is also one of the London stock market's most exciting growth shares, writes Royston Wild.

Read more »

Investing Articles

£20,000 in savings? Here’s how I’d target a £2,219 monthly passive income with FTSE 100 shares

Investing in FTSE 100 shares can be a great way to turn a regular investment into a life-changing passive income…

Read more »

Investing Articles

These are the most popular 2024 Stocks and Shares ISA picks so far

After a few tough years, it looks like the 2024 Stocks and Shares ISA season is getting off to a…

Read more »

Investing Articles

This FTSE 100 ETF may be the simplest way to become a stock market millionaire

Ben McPoland considers one very straightforward stock market investing strategy that could lead to a million-pound portfolio.

Read more »

Investing Articles

I’d buy 11,220 Legal & General shares for £200 a month in passive income

Our writer considers how much money investors would have to put into Legal & General (LON:LGEN) shares to target £2,400…

Read more »

Fireworks display in the shape of willow at Newcastle, Co. Down , Northern Ireland at Halloween.
Investing Articles

These 2 magnificent FTSE 250 shares are on sale right now!

These FTSE 250 companies still look cheap, despite recent share price gains. Here's why our writer Royston Wild thinks they’re…

Read more »

Blue NIO sports car in Oslo showroom
Growth Shares

Down 36% in 2024, how low could NIO shares go?

The electric vehicle sector has seen some tremendous volatility in recent years, but what does the future hold for NIO…

Read more »

Shot of a senior man drinking coffee and looking thoughtfully out of a window
Investing Articles

£5,000 in savings? Here is how I would invest in income shares

This Fool has been searching for ways to generate a passive return via income shares.

Read more »