Over the last week, major stock market indexes such as the FTSE 100 and the S&P 500 have fallen significantly. As a result, a lot of attractive investment opportunities have emerged. Looking for high-quality shares to buy right now? Here are two strong stocks to consider.
One of the world’s top financial data companies
Let’s start with London Stock Exchange Group (LSE: LSEG). It’s a financial markets infrastructure and data company and one of the leading financial data players globally today.
Back in February, this stock was trading above 12,000p. Today however, it can be snapped up for around 10,300p. At the current price, the price-to-earnings (P/E) ratio is in the mid-20s. And I think that’s a very reasonable valuation.
This is a software company with a world-class product, institutional clients that are unlikely to suddenly stop paying for its data services), and the ability to raise its prices, especially now that it’s rolling out artificial intelligence solutions.
It also has several ways to potentially create value for shareholders. For example, it could sell off the London Stock Exchange itself. Or it could list its shares in the US, where it would probably get a higher valuation.
Of course, there are risks to consider with this stock. One is competition from the likes of Bloomberg and FactSet, which are both major players in the financial data space.
All things considered, however I’m very bullish on this one. Currently, it’s my largest UK stock holding.
A wide economic moat
Another high-quality stock I like the look of right now is Visa (NYSE: V), which is listed in the US. It operates one of the world’s largest electronic payments networks.
In early March, it was trading for around $360. Now though, Visa shares can be picked up for around $310. At that share price, the forward-looking P/E ratio using the earnings forecast for the year ending 30 September 2026 (next financial year) is under 25. Again, that strikes me as a very reasonable valuation.
This is a business with a very wide economic moat (meaning new competitors can’t easily steal market share) and plenty of long-term growth potential given the global shift away from cash towards electronic payments. And it doesn’t face any credit risk from credit card loans as it doesn’t issue cards – it simply operates the payments network.
There are other risks to consider, however. A major collapse in consumer spending is one. This would most likely lead to lower revenues for the company as it takes a small slice of every transaction on its network. Changes in the way people pay for things in the long run (such as a shift to cryptocurrencies) are another risk to think about.
Yet I think this company has all the hallmarks of a brilliant long-term investment though. For me, it’s a core holding and I think it’s worth considering today.
This post was originally published on Motley Fool
