Waiting for the “perfect” time to buy a stock is often a fool’s errand. No bell is rung nor whistle blown telling an investor that now is the best time to buy a stock, asserts Chuck Carlson, dividend reinvestment expert and editor of DRIP Investor.
The best approach is to maintain a watch list of stocks, monitor their movements, and pull the trigger when a stock presents an opportunity. S&P Global (SPGI) is presenting such an opportunity.
The stock of this leading financial and business information provider has fallen in recent months and is now trading at a 17% discount to its 52-week high of nearly $380 per share.
Still, I am more than happy to pay that multiple for a stock that is a leader in one of the world’s most precious assets — data. The stock is a strong buy at current prices.
S&P Global operates via four segments:
* S&P Global Ratings offer credit ratings, research, and analytics to investors, corporations, governments, municipalities, commercial and investment banks, insurance companies, asset managers, and other debt issuers.
* S&P Global Market Intelligence provides multi-asset-class data, research and analytical capabilities to investment managers, investment banks, private equity firms, insurance companies, commercial banks, corporations, professional services fi rms, government agencies, and regulators.
* S&P Global Platts offers price data, analytics, and industry insights for the commodity and energy markets.
* S&P Global Indices provides various valuation and index benchmarks for investment advisors, wealth managers, and institutional investors.
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At the heart of what S&P does is data, and the digital age has shown the power and profitability of being the keeper of vast data assets and monetizing those assets.
The company has also benefited from strong financial markets. Indeed, its ratings business has been a big beneficiary of the low interest-rate environment and the crush of debt offerings that have come as a result of favorable borrowing rates.
Also, the company’s indices business benefits from a rising market as more assets are tied to its various indices, which leads to more licensing fees.
S&P Global is adding to its treasure-trove of data with the acquisition of IHS Markit, another player in the fi nancial data and analytics space.
To be sure, S&P Global is paying up for IHS Markit — around $44 billion in an all-stock deal. Short-term digestion issues aside, bolstering data assets and the ability to monetize that growing data stream should lead to solid long-term growth numbers at the combined company.
It is possible that these shares may show further sluggishness until Wall Street sees how the merger is progressing. But I would not wait for an “all-clear” sign to buy.
While the stock is considerably cheaper now than it was last September, these shares still trade at 26 times the 2021 earnings estimate of $11.87 per share.
The stock is offering a compelling opportunity at current prices. Please note S&P Global offers a direct-purchase plan whereby any investor may buy the first share and every share directly. Minimum initial investment is $500.
