Should you buy, hold or sell REA Group shares?
By Roger Montgomery
Over the past three years REA Group, operator of the dominant realestate.com.au home listing site in Australia, has been a market favourite with its stock price up three-fold.
During this period the stock's PE multiple peaked at almost 40 times.
But in early May the shares fell from $48 down to $43 overnight following a quarterly report that surprised the market with a departure from fantastic revenue growth rates of years past.
The share price continued to slide below $38 in June.
When it comes to selling a house REA Group provides a massive audience of buyers and the best chance of achieving a high price.
Yet the company only takes a very tiny fee in comparison, leaving the business with substantial pricing power and strong organic growth prospects for many years to come.
At around $43 the current share price remains 10% below its trading level prior to the results announcement and the PE multiple has compressed to 25.
Near term uncertainty has made the stock cheap for long term investors.
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