Stock market

This growth stock can be positioned to capitalize on the popularity of AI at scale.

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I feel like I’ve got a development stack full of future potential. What I love about this company is that it is working on the cutting edge of data science. It is a leader in products that support a range of industries in advanced analytics, including law, healthcare, and research.

A technology innovation

Innovation is always one of the attributes I look for when investing in a business. The reason is that with a unique product offering, a company is much more likely to stay ahead of the competition. This is even more true if the talent within the organization has a track record of continuing to innovate over a long period of time.

RELX (LSE:REL) invests around $1.7bn per year in technology. This leads to machine learning, artificial intelligence, and large language models. It is capable of processing 40 petabytes of data. To put that in perspective, that’s the equivalent of an 800m four-drawer filing cabinet full of text.

I’ve broken this down into four easy-to-understand steps:

  1. It has access to 40 petabytes of data content.
  2. It uses big data platforms to manage it.
  3. This analysis designs applications.
  4. It provides users with a single point of access to specific information and analysis.

Rewards always come with risks.

Can you believe the firm’s IPO was in 1948? I had no idea how advanced it was in technology. However, this just goes to show how adaptable the company has been throughout its life so far.

I think its success in staying current and relevant is evident in the long-term performance of its share price:

However, it is not all roses. The company’s balance sheet could undoubtedly improve. It includes a significant amount of debt, and overall its total equity is far less than its total liabilities. This can make the company vulnerable.

One reason is that it has less capacity to issue debt to fund future growth projects, as it is already heavily burdened. Therefore, other competitors may be able to gain dominance. I think this is especially true when so many very talented and smart people are collaborating to create advanced applications of artificial intelligence.

It is also a conference organizer.

Another compelling factor I have noticed about this business is that it offers conferences and exhibitions. It includes Big Data Londonand now Data universewhich begins in New York in 2024. This serves as a smart way for RELX to acquire new customers, retain existing customers and promote its brand.

To buy or not to buy?

I have to say, I’m impressed. However, the broader stock market also seems to be quite bullish on RELX shares. This is reflected in the fact that the investment cost to earnings ratio is around 35. That’s more for his industry, and more than he’s historically valued.

I believe this company is the best. However, it comes with a set of risks related to large-scale market swings, a weaker balance sheet than I like, and a difficult valuation.

So, I have my eye on it, but it’s not the kind of investment I’m going to make in a hurry.


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