Up 30% This Year, Thomson Reuters Stock Still Has an Ace up its Sleeve

TRI (TSX:TRI) stock has seen shares explode 30% in the last year, but if you think the company is now done growing, think again.

Amy Legate-Wolfe

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote: “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published February 23, 2024 3:30 pm EST

| More on: TRI

Shares of Thomson Reuters (TSX:TRI) may have increased 30% in the last year, but investors interested in the stock may want to hold out for more. The news and information provider recently posted strong earnings and the potential for more growth from one area of interest.

calculate and analyze stock — Image source: Getty Images

What happened?

First, let’s edge into earnings. TRI stock reported higher-than-expected results this month as the company brought in strong quarterly profit. Wall Street expected earnings per share at US$0.90; instead, Wall Street was pleasantly surprised to see US$0.98 per share. This was quite the jump from US$0.75 per share a year before.

Revenue increased 3% to US$1.8 billion as well, which fell within estimate expectations. Shares then rose 2% after the announcement, especially after the company’s chief executive officer, Steve Hasker, announced this year that it would not be a cost-cutting year.

Instead, TRI stock is expected to end its $1 billion share buyback plan by the end of the second quarter and increase its dividend by 10%. So, all around, it was great news for investors. Yet even more is already underway.

Investing in AI

TRI stock is yet another company that not only invested in artificial intelligence (AI) but saw the benefits come to fruition during this last quarter. Demand for its AI-enhanced products increased among legal and professional clients. This all helped lower costs for everyone, including TRI stock.

TRI stock has since struck deals to license its news content, and to help train larger AI language models. And that investment should be underway this year, according to Hasker.

“We’re in growth and investment mode. 2024 is an investment year for us,” said Hasker in an interview with Reuters. “We see growth opportunities in 2025, 26 and beyond around generative AI, but not exclusively generative AI.”

While not exclusive, this generative AI should have a large part of the company’s product portfolio. It, therefore, should play a larger role this year and in the years to come.

Bottom line

After a strong year, it seems TRI stock is looking to make the company even stronger. Cutting costs through the use of AI is one thing, but expanding through AI is even better. The company now expects organic revenue to rise 6% in 2024. Furthermore, it should go on to rise between 6.5-8% in 2025 and 2026.

So, with AI already helping to increase the company’s content and bring in more readers, as well as professionals, this looks like a strong company for consideration — especially as it continues to grow both through organic and acquisition means. It spent US$2.1 billion in acquisitions last year alone and has US$8 billion set aside for the next three years.

So, is TRI stock done? Not even close. This is why now might be the time to lock up the 1.36% dividend yield and see even more growth in the future. Who knows? There could be another 30% rise in store for investors over the next year alone, never mind the next decade.