IHS Inc. (IHS), Nielsen Hldg NV (NLSN), DigitalGlobe Inc (DGI): Big Value In Information Services

Making the Switch

DigitalGlobe Inc (NYSE:DGI) is another interesting name in the research services space, or at least that’s the long-term goal. The company owns satellites and sells high resolution images to both governments and industrial clients. Better yet, it recently bought one of its main competitors, GeoEye, solidifying its industry position.

There should be cost saving from the merger, like a reduced need to put new satellites in space, but that isn’t the big story. Prior to joining DigitalGlobe Inc (NYSE:DGI), the company’s relatively new CEO worked at a database company. He is looking to transition DigitalGlobe Inc (NYSE:DGI) to a subscription model. Not only will such recurring revenues stabilize the top line, but it should also help spur growth over the long term as the company branches out into new areas.

The top line has grown steadily over the last few years as the company has expanded. Growth spending, including costs associated with the recent merger, has led the bottom line to be far more volatile. Right now “the story” is driving the stock price, with the shares more than doubling since early 2012. That said, if it can successfully make the services shift, there could be more upside. Momentum investors should take a look.

Infrastructure

The basis of each of the above companies is a research infrastructure. That’s costly to build, though it’s a key asset and winds up being a big barrier to entry for competitors. IHS Inc. (NYSE:IHS)’ purchase of Polk shows just how valuable that infrastructure is. The addition of Carfax should continue to push IHS’ top and bottom lines higher.

Nielsen Hldg NV (NYSE:NLSN) is a research giant that presents long-term opportunities for more aggressive types willing to get aboard with a newly public company. DigitalGlobe Inc (NYSE:DGI), meanwhile, is looking to transition to information services, a move that could materially improve its already positive outlook.

The article Big Value In Information Services originally appeared on Fool.com and is written by Reuben Brewer.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends DigitalGlobe. Reuben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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