ANNE ASHWORTH reveals the benefits of investing in UK firms

Daily Mail​

2 days ago

To date, the undisputed leaders of the artificial intelligence industrial revolution have been US tech titans like the mighty Microsoft and Nvidia.
But also in contention are a group of FTSE 100 firms that are deploying AI to make the maximum use of data for the benefit of grateful customers.
These British 'tech-enabled' names include Auto Trader, the £7.2billion online car marketplace, and Experian the £49.9billion credit information group.
Also on the British 'tech-enabled' list is the property portal Rightmove on whose app and website the nation spends close to 17billion minutes every year.
It makes sense to wager on the Magnificent Seven of tech. But there is also a strong argument for diversifying into the British names making strides in AI.
This week, the FTSE 100 has reached a record high. The index could scale further heights, if the recognition grows that Britain is not being left behind in the AI revolution. If you want to take advantage of this disruption, here are some of the shares to back.
AUTO TRADER
There are 81m visits every month to the Auto Trader website, the largest in the market thanks to its compendious data on every aspect of a new or second-hand vehicle. The company has been dubbed the 'king of the virtual forecourt'.
In 2024, the company introduced CoDriver, a range of AI-powered products that make searching easier and adverts look more attractive. Ben Derber, analyst at Rathbones Investment Management, says CoDriver is helping retailers get their adverts live more quickly, leading to consistently high levels of engagement from customers.
Auto Trader is seen as a quality company, with its good cash flow and an impressive ROCE (return on capital employed); this is a measure of how a business uses its capital to produce profits.
These factors suggest that it is the kind of business that belongs in your portfolio for the long-term.
The share price is 835.8p. Analysts have set a target price of 853p, with the most optimistic forecasting a rise to 1040p.
But, in the near future, the shares may pause for breath because Auto Trader's ARPR – average revenue per retailer – is disappointing at present. A shortage of used cars means that they are selling faster than before.
EXPERIAN
Experian moved beyond being just a credit reference agency to become a business that empowers lenders in the UK, Europe, US, Latin America, India and Singapore to make better decisions.
Matt Britzman of Hargreaves Lansdown says: 'Experian is a global information services company specialising in data analytics, credit reporting, and identity verification.'
But borrowers also want a good deal and Experian is exploiting this opportunity.
Britzman adds: 'With financial literacy becoming more widespread, Experian is well-positioned to capitalise, offering tools that empower consumers to manage their credit and financial health more effectively.'
As Derber points out, Experian has been using AI for more than a decade, and is now working with generative AI to offer digital assistant services to consumers and banks and finance firms.
Nine of the 17 analysts that follow Experian rate the shares – which stand at 4056p – a 'buy'.
Recently, Bank of America has raised its target price to 4900p, while Goldman Sachs is even more enthusiastic, setting a target of 5550p.
LONDON STOCK EXCHANGE
The London Stock Exchange Group (LSEG) has hit the headlines this month over a proposed plan to provide 24-hour trading – a result of pressure from small investors who want to buy and sell stocks at all hours, apparently.
But the operation of the London bourse, although vital to the UK economy, is a minor activity for LSEG when compared with the selling of financial data to banks, brokers and others.
The supply of this information will be vastly increased thanks to a ten-year partnership with Microsoft in which generative AI is playing a crucial role.
Matthew Page, manager of the Guinness Global Innovators Fund says that the link with Microsoft gives LSEG 'serious competitive advantage' since it can embed cutting-edge generative AI into its products.
Microsoft has a 4 per cent stake in LSEG. This vote of confidence may be one of the reasons why analysts rate the shares a 'buy'. The price is 10,090p, with the most optimistic brokers targeting 12,600p.
RELX
Until a decade ago Relx (pronounced Rel-ex) was known as Reed Elsevier. The change of name reflected the move from publishing into analytics, for which demand continues to grow – especially when that data is amplified by AI.
Relx is a vital source for scientific researchers suffering from information overload. But there is a particular clamour, too, for the legal research tool Lexis+.
AI is also accelerating growth at Relx's risk division. This arm of the £70.99billion business caters for companies that want to prevent digital fraud.
But Relx is not just about analytics, it is one of the world's top events organisers, running exhibitions and shows in 25 countries. Analysts are positive about Relx's prospects, rating the shares a 'buy' with an average target price of 4428p, against the current 3937p.
JP Morgan is even more sanguine about Relx's future, having raised its target price from 4630p to 4890p earlier this month.
RIGHTMOVE
The British are already obsessed with property. But, as Derber explains, Rightmove is deepening the connection through AI, introducing internal improvements in the speed of the introduction of new features, and supplying such extras as personalised property recommendations.
He expects that the £6.1billion company, founded in 2020, will unveil further ways to ensure that we spend even more of our lives on Rightmove. The most popular moment to visit the website or app is 8.59am on Monday morning, as people start work but seek consolation in pictures of desirable residences.
Rightmove shares have risen by 21 per cent this year to 780.4p, spurred by hopes that an easing of interest rates will encourage house hunters. Analysts rate shares a 'hold' since future growth is already priced into the stock.
But Duncan Green, manager of the Schroder UK Multi-Cap Income Fund, which owns a slice of Rightmove, makes the case for the shares.
He considers the company to deliver 'a rare level of efficiency and profitability', while also offering an income through dividends and share buybacks.
If AI is making you and your friends look at Rightmove even more than before, consider taking a chance on the shares on the basis that others will be doing the same.