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Why Hold Strategy is Apt for IHS Markit (INFO) Right Now
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A prudent investment decision involves buying stocks that have solid prospects and selling those that carry risks. At times, it is rational to hold certain stocks that have enough potential but are weighed down by tough market conditions.
Here we discuss about IHS Markit Ltd. , a stock that has gained 19% year to date, outperforming the 16.3% rise of the industry it belongs to. The company also has an expected long-term earnings per share growth rate of 11.8% and a Growth Score of B.
We believe the stock has the potential to exceed expectations moving ahead. The reasons behind our optimism include the company’s benefits from a well-diversified global customer base, solid recurring revenue generation capacity and acquisitions.
Let’s discuss them in detail.
Well Diversified Global Customer Base
IHS Markit is benefiting from well diversified global customer base and strong brand recognition. The company has a consultative product development approach, which means it works closely with its customers in introducing offerings and enhancing established ones. This, in turn, has helped it build strong customer relations over time.
Currently, IHS Markit’s offerings are well established across multiple industries and geographies. The company intends to continue innovating and developing new product offerings, and investment priorities primarily in automotive, energy and financial services.
Strong Recurring Revenue Generation Capacity
IHS Markit’s products and services are offered primarily through recurring fixed and variable fee agreements, which realizes stable revenues and cash flows. Furthermore, the company’s efficient utilization of business model, operational improvement and financial discipline results in solid margin expansion. Also, its business requires low capital requirement, which in turn, boosts IHS Markit’s cash generation capacity.
Acquisition is a key growth strategy for IHS Markit. So far in fiscal 2018, the company acquired DeriveXperts and Ipreo. Both these transactions are aimed at expanding the company’s financial services business. Last year, IHS Markit acquired automotiveMastermind Inc. (“aM”) and Macroeconomic Advisers (“MEA”). While the aM buyout helped the company to improve buyer experience in the car dealer market, the MEA acquisition increased its macroeconomic offerings, especially in the policy and financial markets. In fiscal 2016, IHS Markit acquired CARPROOF and Oil Price Information Service (“OPIS”). While the CARPROOF acquisition expanded the company’s vehicle history report services to Canada, the OPIS buyout diversified its energy portfolio. Overall, these acquisitions are helping the company to expand offerings and strengthen its international footprint.
The long-term expected EPS (three to five years) growth rate for Genpact, WEX and Total System Services is 10%, 15% and 14.6%, respectively.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
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Why Hold Strategy is Apt for IHS Markit (INFO) Right Now
A prudent investment decision involves buying stocks that have solid prospects and selling those that carry risks. At times, it is rational to hold certain stocks that have enough potential but are weighed down by tough market conditions.
Here we discuss about IHS Markit Ltd. , a stock that has gained 19% year to date, outperforming the 16.3% rise of the industry it belongs to. The company also has an expected long-term earnings per share growth rate of 11.8% and a Growth Score of B.
We believe the stock has the potential to exceed expectations moving ahead. The reasons behind our optimism include the company’s benefits from a well-diversified global customer base, solid recurring revenue generation capacity and acquisitions.
Let’s discuss them in detail.
Well Diversified Global Customer Base
IHS Markit is benefiting from well diversified global customer base and strong brand recognition. The company has a consultative product development approach, which means it works closely with its customers in introducing offerings and enhancing established ones. This, in turn, has helped it build strong customer relations over time.
Currently, IHS Markit’s offerings are well established across multiple industries and geographies. The company intends to continue innovating and developing new product offerings, and investment priorities primarily in automotive, energy and financial services.
Strong Recurring Revenue Generation Capacity
IHS Markit’s products and services are offered primarily through recurring fixed and variable fee agreements, which realizes stable revenues and cash flows. Furthermore, the company’s efficient utilization of business model, operational improvement and financial discipline results in solid margin expansion. Also, its business requires low capital requirement, which in turn, boosts IHS Markit’s cash generation capacity.
IHS Markit Ltd. Revenue (TTM)
IHS Markit Ltd. Revenue (TTM) | IHS Markit Ltd. Quote
Acquisitions Expanding Offerings
Acquisition is a key growth strategy for IHS Markit. So far in fiscal 2018, the company acquired DeriveXperts and Ipreo. Both these transactions are aimed at expanding the company’s financial services business. Last year, IHS Markit acquired automotiveMastermind Inc. (“aM”) and Macroeconomic Advisers (“MEA”). While the aM buyout helped the company to improve buyer experience in the car dealer market, the MEA acquisition increased its macroeconomic offerings, especially in the policy and financial markets. In fiscal 2016, IHS Markit acquired CARPROOF and Oil Price Information Service (“OPIS”). While the CARPROOF acquisition expanded the company’s vehicle history report services to Canada, the OPIS buyout diversified its energy portfolio. Overall, these acquisitions are helping the company to expand offerings and strengthen its international footprint.
Key Picks
IHS Markit has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Business Services sector include Genpact Limited (G - Free Report) , WEX Inc. (WEX - Free Report) and Total System Services, Inc. . All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term expected EPS (three to five years) growth rate for Genpact, WEX and Total System Services is 10%, 15% and 14.6%, respectively.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Click here to see the 5 stocks >>