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Even with a run up in price, I would buy this FTSE 100 stock

Information-based analytics and decision tools provider RELX (LSE: REL) is on a roll. Its share price rose to the highest levels in a year after its 2018 results announcement last Thursday. The price increased from the previous day at the fastest rate in five years (almost 5%) and broke even that record in the next trading session, rising by over 5%.

There is a lot to like about the firm, but with this latest run-up in prices, is it still a good deal for investors? I think three things can help in answering that question.

1. It’s a rock

It is super stable, even though it’s a bit of a boring business. More than half of its business comes from subscriptions, which is a predictable source of revenues. But subscription services are relatively immune to business cycle fluctuations. As a result, the company’s total revenues have grown consistently between 3% and 4% during the past five years, while operating profits have risen by 5% to 6% annually. 

I wrote about the Sage group, which also has a captive client base, a few months ago. At that time, its share price was trading close to one-year lows, but it has seen a sharp increase of over 28% since. This is a good indication of such businesses’ appeal  to investors. 

And the argument for RELX being a stable business gets more compelling. Geographical diversification reduces risks. With Brexit a heartbeat away, this is a particular strength. Over half its revenues come from the North American market and only about a quarter from Europe.

2. Future looks bright

The future looks good, adding to the share’s attractiveness. In his outlook for 2019, the company’s CEO Erik Engstrom said: Key business trends in the early part of 2019 are consistent with 2018, and we are confident that, by continuing to execute on our strategy, we will deliver another year of underlying growth.”

It’s worth pointing out that the company isn’t just growing organically. Last year it made its biggest acquisition yet, of digital identity platform ThreatMatrix in order to grow its risk and business analytics division. I like this additional route to growth to spur growth, which is part of the company’s longer-term strategy. In 2017 alone, it made eight acquisitions. Even with the latest purchase, the debt ratios are largely in check, which is a definite positive. 

3. Positive peer comparison

Finally, despite the latest increase, the share price isn’t the most expensive out there from an earnings ratio standpoint. While there aren’t any exact peers to compare it with, I continued to consider RELX in relation to the Sage group, which has higher forward earnings ratio of 25x compared to RELX’s 21x.

Also, Sage’s price has risen pretty much steadily over the past month, even after seeing a sharp increase after its results announcement. I expect a similar trend for RELX, which indicates that the price could go on rising. For an investor with time and patience, though, the next broad market dip might be an opportunity to buy the share at a much better price. Whether it’s bought now or later, though, I feel that this is a share that can be bought with confidence. 

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Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has recommended RELX and Sage Group. 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.