Stock market

This top-performing FTSE 100 company could be 30% undervalued.

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I use Right move (LSE:RMV) often to explore future places I want to live. It is a leading online platform that aggregates real estate in the UK. It is also one of the most attractive investments. FTSE 100I think.

What I love about this business is that it has built a solid reputation. Now, as it looks at new growth strategies, it will begin leveraging its platform for other use cases, including commercial real estate and financial services. In many respects, the Rightmove brand is just getting started.

Is high growth enough?

According to Rightmove’s latest annual report, there are around 2bn visits a year. Additionally, over the past 20 years, the firm’s revenue and net income have been growing at an exceptionally fast pace. Although it has dipped a bit recently, I think it may have a chance to grow as it has in the past due to the exciting new initiatives in leveraging its platform, which I alluded to above.

Despite its strong historical business results, I am a bit wary that an investment in Rightmove may not develop as well as some other big tech companies. But to compensate, it offers a reasonably generous dividend, which is typically very low in technology stocks.

I love his business moat.

In investing, one of the popular terms for a company that has operations that are difficult to compete with is that it has a ‘moat’. In the case of Rightmove, I believe the brand it has built is very difficult to challenge. For example, when I go online to search for UK property, I search for Rightmove before I even get to Zoopla. On the market, or prime location. This is mainly due to its size, which means it can attract better features and has a more extensive catalog. The associated higher revenue can lead to a better user experience through better platform development in the long run.

A potential value opportunity

As is the case with many high-growth businesses, Rightmove’s valuation is not stellar on the surface. After all, its price-to-earnings ratio is around 21. It may seem like a lot, but it’s normal for his industry. What’s more, over the past 10 years, its average price-to-earnings ratio has been around 31. So, I probably have about a third of the discount in hand here. This is especially true because over the last 10 years, even when the ratio was very high, the share price continued to rise. The reason it is less now is because the growth prospects have weakened a bit. But as I mentioned, I think this is only temporary.

I always assess the risk before making a decision.

Given that this company has been around for a long time, I think it’s fair to say that its markets are pretty saturated. And when we consider overseas markets, most countries already have their preferred and dominant service providers. There isn’t actually a global, unified online real estate catalog at the moment, and there’s too much competition overseas for Rightmove to fulfill that role. So, I think there is some risk of progress in decades if the Right Move doesn’t think creatively.

Nevertheless, the company is strong. So, I’m considering investing in it, but I have a few other businesses I’d like to invest in first.

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