Should I buy these 2 dominant FTSE 100 shares for long-term growth?

This Fool is looking past current issues and hunting for long-term growth options. Could these FTSE 100 shares fit the bill?

| 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.

Person holding magnifying glass over important document, reading the small print

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.

Two FTSE 100 shares I want to take a closer look at for my holdings are Experian (LSE: EXP) and RELX (LSE: REL).

Experian

Best-known for its credit checking operations, the business released a trading update earlier today that made for good reading, in my opinion. Earnings before tax and interest reached $928m. This was a healthy jump from the $873m at the same time last year. Plus, revenue rose by 6%, which was in line with forecasts.

Experian benefitted from new product launches in Latin America. I’m excited by this as this is an avenue that could provide some further growth opportunities. This could help boost performance and potential returns for investors.

It’s worth noting that Experian shares look a bit pricey on a price-to-earnings ratio of 39. This is substantially higher than the Footsie average of 14. Overpaying for shares is a real risk as poor performance or failing to hit forecasts could dent the share price.

Back to the positives, Experian shares would boost my passive income with a dividend yield of 1.9% on offer. However, I’m conscious dividends are never guaranteed.

To conclude, Experian isn’t a no-brainer buy for me right now but there’s lots to like. Its dominant market position, positive results and confidence moving forward – as shown by recent forecasts – as well as passive income opportunity, make it a stock I’ll be watching with keen interest. I may buy some shares if they dip to a level where I’m tempted to snap them up.

RELX

A global provider of information-based analytics and decision tools, RELX is a mammoth of a business. One of its best known products is LexisNexis, a tool used in the legal sector. In fact, I’ve used it in a previous life.

Like Experian, it possesses a dominant market position and wide geographic footprint. Plus, when you consider the digital age we live in, there’s plenty of scope for RELX shares to continue to soar and provide juicy returns with its vast offering.

On the topic of returns, RELX shares offer a dividend yield of 2%. On top of this, the business has a good track record recently of growing revenue and profits. However, I do understand that past performance is not a guarantee of the future.

One threat I’ll keep a close eye on is the artificial intelligence (AI) revolution that could threaten the status quo and dominance of informational products RELX offers. However, RELX recently announced it already incorporates AI tools within its product stack and will continue to do so as well as enhance this aspect of its offering.

Similarly to Experian once more, RELX shares have bucked the recent trend of FTSE 100 shares struggling, and have risen. Due to this, its valuation is a bit higher than I would like, on a price-to-earnings ratio of 30.

I reckon RELX shares should be able to provide steady growth and returns in the long-term. However, the shares are a tad expensive but sometimes you have to pay a premium for a quality business. I’d buy RELX shares the next time I have some spare cash — and I’d rush to buy them if they dipped a little!

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.

Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has recommended Experian Plc and RELX. 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

Midnight is celebrated along the River Thames in London with a spectacular and colourful firework display.
Investing Articles

Nvidia shares hit a new high after record earnings. Is there a lot more to come?

Nvidia stock smashes expectations, as quarterly profit soars 600%. It's time for a 10-for-one stock split too, as it reaches…

Read more »

Abstract 3d arrows with rocket
Investing Articles

Scottish Mortgage shares rise following FY update! Time to buy?

Scottish Mortgage (LON:SMT) shares were closing in on 900p today after a positive full-year report from the giant FTSE 100…

Read more »

British Isles on nautical map
Investing For Beginners

It’s time! Here’s my FTSE 100 hit list for the general election

Jon Smith outlines the potential reaction for the FTSE 100 from the upcoming general election and the main stocks he's…

Read more »

Investing Articles

National Grid reveals £7bn rights issue and the share price plunges – should I invest now?

The National Grid share price has dropped almost 10% and a dividend cut is looming, but it may be a…

Read more »

Young mixed-race woman jumping for joy in a park with confetti falling around her
Investing Articles

Nvidia stock is becoming more affordable!

Nvidia stock is up 2,500% over five years, but the chip giant’s share split -- announced during its earnings report…

Read more »

Investing Articles

Are Rolls-Royce shares good for passive income?

Our writer is getting mixed messages about the Rolls-Royce dividend. But whatever happens, he thinks passive income hunters will be…

Read more »

Investing Articles

Could the Rolls-Royce share price end 2024 above £5?

As the Rolls-Royce share price continues its remarkable run, our writer considers where it might be at the end of…

Read more »

Investing Articles

UK stocks are hitting all-time highs! Yet these 2 still look cheap to me

The FTSE 100's on a roll. But it's still possible to pick bargain UK stocks, provided we know where to…

Read more »