Rightmove released their first half trading results this morning. The highlights include a 20% hike in revenues, underlying operating margins of 74%, underlying earnings up 24% and a 18% dividend hike. Great results, but on all fundamental values the shares look expensive. On last years figures they currently trade on a p/e above 30 with a market cap. approaching £2.3bn and the dividend yield is not much more than 1%.
I couldn't justify paying this price for my own long term portfolio, although I greatly regret not buying them in the depths of the financial crisis when they were less than a fiver. This is surely a Warren Buffet stock. The company boasts an invisible moat, a virtual monopoly in the UK. What's the first website you'd visit if you're looking to buy a property? It's got to be Rightmove.
The company's model ensures outstanding gross margins, it generates copious amounts of cash and has a history of hiking the dividend payment each year. In fact the dividend was held even between 2009-2010.
So whilst I'm not a real buyer (I don't believe that it will multibag in the near future from here), I'm going to add it to the virtual trading portfolio believing that it can surpass the previous highs of this year. As I write the price is £22.96.
Virtual portfolio Price paid Current price Price sold
Vesuvius £4.57 £4.66
Vodafone £2.07 £2.04
Morrison £1.93 £1.73
Rightmove £22.96 £22.96
I don't think it's likely that there will be an opportunity to buy the shares and add them to my real portfolio at the bargain basement price which arose in 2009, but should the opportunity ever present itself when the shares once again look cheap then I'll more than likely snap them up, despite preferring to concentrate my efforts on the small/micro cap sector.
No comments:
Post a Comment