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Incredibly, the FTSE 100 just completed 11 days of positive gains. This was the blue-chip index‘s best run since 2019!
The Footsie tanked in early April when President Trump’s sweeping tariffs announcement threatened to send the global economy into a tailspin. Since then though, there have been rowbacks and pauses from the US administration. This has calmed markets, at least for now.
Specifically for the FTSE 100, it means the index has nearly clawed back all the losses following Trump’s announcement. I certainly didn’t expect 11 days of gains, proving once again how utterly unpredictable markets can be in the short term.
Damage might already be done
But we’re not out of the woods just yet. The 90-day pause on most ‘reciprocal’ tariffs ends in July. Depending on what happens then (or before), the index could pull back sharply or keep climbing to notch new record highs. It’s a bit of a coin toss.
Moreover, there will already damage done to global growth from all the uncertainty. How much damage we don’t know yet, but the 10% blanket tariff is still in place, as is the extraordinary 145% duty on goods from China.
According to a poll carried out by Reuters, 60% of economists (from more than 300) said the chance of a global recession this year is now high or very high. So it’s possible this FTSE 100 rally proves to be short-lived.
On my radar
If this is the case and the FTSE 100 retreats, I’m going to consider buying shares of Experian (LSE: EXPN). They’re down 9.1% since the end of January, but have still returned around 200% in a decade (excluding dividends).
The company gathers and shares information about credit history, helping lenders decide which people and businesses to give loans or credit to. It also helps companies prevent fraud and identity theft.
While Experian isn’t necessarily a high-growth firm these days, it still posts respectable numbers. In its last financial year, which ended in March, revenue is expected to have increased by around 6% to $7.5bn. The forecast is for that to rise above $8.1bn this year.
Experian is a capital-light business that makes money through data and analytics services. Consequently, it’s very profitable, with a healthy 24% operating margin. Steady profitable compounders like this have the potential to produce solid long-term returns.
My only problem here is the valuation. Right now, the stock’s price-to-earnings (P/E) ratio is around 38. While I don’t mind paying up for high-quality global businesses, that P/E multiple looks a little high for my liking.
Plus, in a recession, fewer individuals and businesses might apply for loans, credit cards, or financing, which could reduce the need for Experian’s core credit-checking services. This risk doesn’t appear priced in at present.
That said, lenders also become more careful about who they lend to in tough times. So I’d expect Experian to hold up better than many other firms.
The company sits at the centre of big global shifts towards digital lending, cybersecurity, and data analytics. These long-term trends are powerful and still have years to run.
I’ll consider snapping up this stock if the FTSE 100 tanks in the summer.
