During the current times of a looming recession, higher inflation, and rising interest rates, the best thing for an investor to do is to have a long-term perspective. Choosing the right stock to build a long-term portfolio is the need of the hour. However, with so much information available about the stocks, it becomes a daunting task for investors.
For such situations, tools from TipRanks come to the rescue, and the Smart Score tool fits here perfectly. Using this tool, we have shortlisted two FTSE stocks, financial company Legal & General (GB:LGEN) and technology company RELX (GB:REL). These companies score a “Perfect 10” on this tool and also have a Buy rating from the analysts.
According to this tool, a score is assigned to each stock after analyzing them on eight different factors. These include analyst ratings, technical and fundamental analysis, hedge fund activity, insider transactions, etc. The assigned score measures the stock’s potential to outperform the market’s returns, with 10 being the best.
Let’s take a look at the details.
Legal & General Group Plc
Legal & General Group is a UK-based financial company providing insurance, pensions, retirements, and asset management services. The company holds a dominant position in the UK market and serves more than 10 million customers worldwide.
The analysts remain bullish on the stock mainly due to its stable business model. Even though customers could reduce their spending on financial services in a recession, the long-term demand for the company’s services is solid. Moreover, with a brand name like this, it is easier to attract customers and achieve cost efficiency as well. In the first half of 2022, the company’s operating profit jumped by 8% to £1.2 billion, owing to higher volumes and margins. The company posted an ROE (return on equity) of 21%, which shows the synergy between its business segments.
Another attraction for the stock is its dividend game. The company has been known for its stable dividend over the years, including during the pandemic. The dividend yield of 7.24% is much higher than the industry average of 2.1%. In the first half, the company announced an interim dividend of 5.4p, registering a growth of 5% on the previous year.
The company’s balance sheet remains strong enough to fund the dividends in the long term. The company’s cash generation increased by 22% to £1 billion, and capital generation was up by 14% to £900 million. The company is on track to meet its target of cumulative cash and capital generation of £8.0 – £9.0 billion by 2024.
Legal & General Share Price Forecast
According to TipRanks’ analyst consensus rating, Legal & General stock has a Moderate Buy rating. The stock has four Buy and four Hold recommendations.
The LGEN share price forecast is 307.8p, which is 19.2% higher than the current price level.
RELX Group Plc
UK-based RELX Group provides data and analytical tools to its customers in more than 180 countries.
The company focuses a lot on acquisitions as part of its growth strategy. In the first half of 2022, the company completed six acquisitions for £342 million. These acquisitions in the content and data analytics segments will further support its full-year revenue growth in 2022 and beyond. The company posted revenue of £3.9 billion in the first half, depicting a growth of 13% on a year-over-year basis.
The company rewarded its shareholders with a 10% increase in its interim dividend of 15.7p per share.
In its recently issued trading update for the first nine months, the company confirmed its full-year outlook and remained positive about underlying revenue growth in all four of its segments.
Is RELX a Good Stock?
RELX’s stock enjoys good coverage from analysts and has a total of 11 ratings on TipRanks. Overall, the stock has a Strong Buy rating at a target price of 2,877.64p. It shows an upside of 23% on the current price level.
The stock has gained around 8% in the last year.
Many analysts have recently reiterated their Buy ratings on the stock. The analysts feel that the company is right on its recovery path and that profits will soon surpass their previous records.
Conclusion
With the constant fluctuations in share prices, these two stocks look like a safe pick for investors. Their “Perfect 10” score on the TipRanks tool is correctly justified by their stable earnings growth and attractive passive income via dividends.
