- Some quality valuations look stretched relative to growth
- Travel businesses could have hit a peak
It’s somewhat a case of “as you were” for our quality shares UK-large cap screen, although Intercontinental Hotels Group (IHG) is now the only company to meet all our criteria.
Data, analytics and publishing business RELX (REL), now fails one forward-looking test. Going by current FactSet consensus forecast data, it isn’t expected to grow its earnings per share by more than 10 per cent in its 2024 Financial year from the forecast EPS for the as yet unreported FY2023 (results to be announced in February). This is important as strong growth is needed to justify the expensive rating. The big unknown will be how the AI narrative plays out, but although the long-term prospects for RELX are likely to be good (and 79 per cent of FactSet’s surveyed brokers have it on a buy), if there aren’t surprises or upgrades, investors may well be able to take advantage of better entry points this year.
