One growth stock I believe could be a good buy now — with a view to it providing me consistent and growing returns — is Informa (LSE: INF).
Knowledge and exhibitions
Informa has two main facets to its offering. It publishes specialist business and industry information through journals, magazines, and newsletters to help businesses stay informed and at the forefront of their respective industries. It also runs programmes, conferences, and exhibitions for a multitude of sectors across the world.
As I write, Informa shares are trading for 704p. At this time last year they were trading for 558p, which is a 26% increase over a 12-month period. That’s great performance considering many FTSE stocks have struggled due to macroeconomic and geopolitical factors.
The investment case
Informa shares can be at the mercy of the economic outlook. For example, when there is uncertainty or external issues, performance can be impacted. There was evidence of this when I reviewed past performance as revenue, profit, and dividends have been volatile. A prime example of an external factor is when the pandemic struck. The exhibition line of business struggled due to lockdowns.
Plus, Informa shares’ recent great run means that they look a bit expensive with a price-to-earnings ratio of 16. Any bad news could send the shares tumbling. In an ideal world, I want to buy a growth stock cheaply, with the view that it will head upwards in time.
Moving to the bull case, Informa has been performing well recently against the backdrop of many issues impacting markets. I found this by reviewing Informa’s latest half-year report released in July. Revenue, operating profit, and free cash flow all increased by a healthy margin. Plus, the business stated it is on track to record excellent full-year results and reach a 30% increase in revenue and 50% increase in operating profit. However, I’m conscious that forecasts don’t always come to fruition.
Next, I’m buoyed by Informa’s business model. Firstly, it’s looking to target lucrative exhibition markets including the US, China, and growth in the Middle East. In addition to this, its other offering of scholarly information and research can also supplement the business well. This diversification is attractive.
Finally, Informa shares would boost my passive income with a dividend yield of 1.8%. City analysts reckon the business is on track to grow in the next two fiscal years so I’d expect this to increase. However, I do understand that dividends are never guaranteed.
A growth stock I’d buy
Informa has been performing well recently and I’m keen to see full-year results to see if the second half of the year has been as good as the first. I understand there could be some turbulence ahead due to macroeconomic issues.
I’d be willing to buy Informa shares the next time I have some spare cash. The business looks like it’s on a great growth trajectory and could be a shrewd buy now before it really takes off.
