2 Hot Book Publishing Stocks (That Aren’t Amazon)
Updated: Sep 10, 2019
Amid declining book sales and the looming presence of Amazon, these two traditional publishers are pursuing smart diversification strategies such as software and education.
As Jeff Bezos’s scrappy little bookshop continues to expand its presence into almost every conceivable area of commerce and technology, it can sometimes feel like this is Amazon’s (NASDAQ: AMZN) world and the rest of us are just living in it.
From cloud computing to video streaming, from high-street retail to space travel, there are few areas of business that haven’t had the fear of Bezos put into them. But the very first industry to feel Amazon’s pressure was, of course, the one in which the site made its name: book publishing.
Economically, these are dark times for lovers of the printed word, and yet there are still companies on the stock market that have managed to withstand the Amazon earthquake (or “the rattle from Seattle,” as we call it), even if that has meant redefining themselves. Here are two of them.
Headquartered in London, Pearson (LON: PSON) is a multinational publishing and education conglomerate best-known as the owner of Penguin Group. Originally founded in the 1840s as a construction company, the company switched to publishing after the First World War. In the ensuing century, it grew to be the largest book publisher in the world.
By 2015, digital trends had caught up with Pearson, and the company divested some of its Penguin shares as well as selling its stake in The Economist and The Financial Times, two of the world’s bestselling newspapers. Since then, it has focused primarily on educational publishing, a space that CEO John Fallon believes will be “one of the great global growth stories of the next decade.”
Of course, it hasn’t been easy for a company of Pearson’s size to pivot its core business in this way, and the past few years have been marred by several successive quarters of sales declines. However, the company appears to be emerging from that period with growth in all divisions as it pursues its “digital-first” approach to education. With solid enrollment growth in its Online Program Management business, the company’s investments in its software are finally paying off.
2. John Wiley & Sons
Not exactly a household name, John Wiley & Sons (NYSE: JW.A), or simply Wiley, is the publishing house behind the hugely popular ‘For Dummies’ educational book series. Established in Manhattan way back in 1807, the company can be credited with bringing to light the work of many great American authors such as Herman Melville and Edgar Allen Poe.
Astonishingly, the company and its acquisitions have published the works of more than 450 Nobel Laureates since the Prize was introduced in 1901. With such prestige attached to its name, Wiley can surely claim to be a company every bit as quintessentially American as Wal-Mart (NYSE: WMT) or Coca-Cola (NYSE: KO).
Like Pearson, Wiley has moved away in recent years from traditional literary publishing towards the educational space. In 2007, the company made its biggest acquisition to date when it purchased Blackwell Publishing for just over $1.1 billion, massively expanding its scientific, medical, and technical textbook businesses. Meanwhile, the company’s online library has become a major hub for academics pursuing specialty subjects.
Wiley’s revenue has been relatively flat -- sitting at around $1.8 billion -- over the last year or two. However, it has managed to turn its various online academic ventures into serious cash cows. The company’s digital products and services now account for 75% of total revenues. All in all, it’s certainly come a long way since publishing Moby-Dick.
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