Everyone has their own style when it comes to investing. Some common ones that I come across often are value investing and growth investing. Value tends to look for good quality existing companies to buy into, while growth focuses on stocks that maybe aren’t that well known, but have the potential to offer large returns.
Certainty, if I asked a growth investor (or to anyone, really) whether they would like to buy into a company that could double their money in a year, their eyes would light up at the prospect of learning more. Unfortunately, predicting a share price doubling in value is quite different to it actually doing so.
However, there is still a lot of merit in looking at a company that has done exceptionally well, and trying to see whether this growth could continue.
Looking at the past, and the future
Future (LSE: FUTR) is the company I am referring to. It markets itself as a ‘global multi-platform media company’. What does this mean? Well, mostly through acquisitions, Future indirectly or directly helps to publish household magazines such as Total Film, FourFourTwo, Real Home, and more.
The share price rally of the firm, which currently sits in the FTSE 250, has seen it move from 568p a year ago to 1,294p, as of close yesterday. So if you had invested £500 in December of last year, this would currently be worth £1135, a rise of 127%.
What is the secret?
We often speak of diversifying your investments to lower your risk. In the same way, Future has 220 different magazine titles which it puts out, across a very broad subject base, appealing to a wide demographic. It has made a concerted effort to boost this diversification over the past couple of years through acquisitions.
This time last year it bought publisher Purch, which gave the firm U.S. exposure. Early this year it bought two cycling brands from Immediate Media, boosting its presence in the sporting segment. In the summer it bought Mobile Nations, which focuses more on tech engagement than publishing, giving it more of a vertical presence in the industry.
Finally, some of the recent rally has been down to the news at the end of October that Future wants to buy TI Media, subject to regulatory approval. This would make Future the largest magazine group in Europe.
Thus, Future has been able to grow itself partly through organic growth but massively through external growth. The broad range of scope it has within the publishing industry allows it to benefit from economies of scale and also builds up barriers to entry for new firms wanting to enter.
If Future continues on with its current business strategy, which it has been implementing for the past few years and is clearly working, then I would be confident in buying at current levels.
Further, the future acquisitions will only add to its firepower, and the diversified range it has should buffer it in a downturn. Even despite the recent rally, I would look to buy Future.
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Jonathan Smith and The Motley Fool UK have no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2019