Earlier this week, I was looking at the top 10 constituents of the UK’s FTSE 100 index. And one thing jumped out at me – RELX (LSE: REL) is currently the sixth-largest business in the index.

At present, this under-the-radar company has a market cap of £77bn. That means it’s bigger than BP, British American Tobacco, GSK, Barclays and many other well-known companies.

So, what does this company do? And more importantly, is it worth considering for a portfolio today?

A data powerhouse

RELX is a provider of information-based analytics and decision tools for professional and business customers. Its goal is to help customers make better decisions, get better results, and be more productive.

Today, the firm serves customers in four main areas – risk, scientific, technical & medical, legal, and exhibitions. Employing more than 36,000 people worldwide, it operates in around 180 countries.

In recent years, RELX’s share price has risen significantly. And it’s easy to see why.

In the coming years, businesses are increasingly going to turn to data and analytics to boost productivity. And RELX – which has recently been incorporating artificial intelligence (AI) into its solutions – could be a major beneficiary of this trend.

It’s worth noting that its databases currently house over 40 petabytes of information. If data is the new oil as they say it is, this company is akin to a gigantic oil well.

Worth considering?

Should investors consider buying the stock today?

Well, there is a lot to like about RELX from an investment perspective.

For starters, the company is expected to generate solid growth in the years ahead on the back of the data/AI boom. For 2025, revenue and earnings per share are projected to increase 7.4% and 11.1%, respectively (that’s a higher level of growth than a lot of FTSE 100 companies are generating).

I’ll point out that portfolio manager Nick Train – who holds the stock in his UK equity fund – said last year that he believes RELX has “transformative profit potential ahead.” Clearly, he’s bullish here.

Secondly, the company is very profitable. Between 2019 and 2023, return on capital employed (ROCE) averaged 23%. This is an important metric. Because history shows that companies with a high ROCE tend to be good long-term investments.

There’s also a growing dividend. This year, the payout is forecast to grow about 9%. That said, the yield is only about 1.7%. So, it’s not a stock for big income.

Additionally, the stock has a great long-term track record. Over the last five years, it has climbed about 100%. Over the last 10 years, it’s up about 250%. There are not many Footsie stocks with track records like that.

On the downside, the valuation is currently quite high. With analysts expecting earnings per share of £1.33 this year, the forward-looking price-to-earnings (P/E) ratio is about 31.

That’s not crazy for a data company. But it doesn’t leave much room for error (such as a slowdown in business growth or an unexpected drop in profits).

Another risk here is sentiment towards tech/AI stocks. If this was to deteriorate, we could see some profit-taking.

Given the valuation, I think it could be smart to consider waiting for a pullback for anyone interested in buying this stock. They might not have to wait long – full-year earnings are tomorrow (13 February) and these could potentially create some volatility.