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Britain is pretty good at technological innovation and is home to many thousands of outstanding tech companies. Frustratingly, it’s less good at providing the right environment for these businesses to scale up into world-beating tech champions, with many being snapped up at an early or pre-listing stage or taken off the market.
But we haven’t let every technology company slip through our fingers and one flourishing subsector, with a strong contingent of listed companies, is that of data and analytics. Relx, currently the fifth-biggest company on the UK market, is one such business with a database built on more than 138bn legal and news documents, research papers and the ilk providing highly valued information to legal, medical, risk and scientific professionals around the globe.
The Stock Exchange itself falls into the data specialist category. Having pulled off a clever strategic move in 2021 when it bought financial data provider Refinitiv, it has grown the intelligence side of its business into its main revenue generator, making it a highly successful data company with a small sideline in public markets.
GlobalData is smaller but its proprietary data sets, intelligence and insights cover more than 20 industries ranging from travel and tourism to pharmaceuticals and sport. Experian, a specialist in consumer credit, pitches itself as an “indispensable partner” turning data into information that gives businesses and consumers financial power. It’s expanded beyond financial markets, and has built up its fraud prevention capabilities.
The essence of what all of these businesses do is help customers make informed decisions, manage risk and threats, understand market trends and develop successful strategies which means their addressable markets are huge. AI is a threat in some respects, but its power is being harnessed too and they all hold a trump card: their data is proprietary, high quality, trusted and vast.
BUY: London Stock Exchange Group (LSEG)
The data and analytics provider’s partnership with Microsoft will start delivering this year, writes Arthur Sants.
The London Stock Exchange Group is positioning itself as a beneficiary of the data-driven, artificial intelligence future the big tech companies are hoping to build.
In 2022, Microsoft acquired a 4 per cent stake in LSEG and signed a 10-year partnership agreement. As part of the deal, LSEG has begun to move its data and analytics to the Microsoft Azure cloud and give Microsoft users direct access: for example, embedding financial data into Microsoft Teams.
LSEG is trading on an expensive forward p/e ratio of 27. But there are few businesses of this quality out there. LSEG is good enough for Microsoft, and it is good enough for us.
SELL: Reach (RCH)
A cost-cutting push helped move Reach’s operating profits into the black at the half-year mark, but the top line is still playing catch-up, writes Valeria Martinez.
A strong final quarter saw digital revenues return to growth in 2024, yet this was offset by a 6 per cent decline in like-for-like print sales.
The publisher has grappled with a shrinking digital audience and declining page views since 2023. Digital page views rebounded in the final quarter, but they were still down 14 per cent for the year.
Management expects further digital progress in 2025, but the broader advertising market remains weak. A forward price/earnings ratio of 3.8 might look cheap, but with no clear catalyst for a turnaround, we believe that discount is warranted.
HOLD: Bunzl (BNZL)
The FTSE 100 distributor expects underlying trends to improve slightly this year, writes Valeria Martinez.
The company, which supplies businesses with everything from food packaging to safety gear, put a record £883mn to work on 13 acquisitions last year. These deals helped lift constant currency revenue growth but, along with a growing own-brand push, nudged operating margins up by 30 basis points to 8.3 per cent year on year.
Bunzl’s shares fell by 8 per cent after the results, wiping out any gains made over the past year and leaving the stock trading at 15.2 times forward earnings. A £700mn-a-year acquisition pledge through 2027 should support growth as capital returns reward patience, but tricky end markets and integration risks keep us wary.
