Is the REA Group Limited (ASX: REA) share price a buy?
REA Group is the owner of Australia’s most popular real estate portal, realestate.com.au. It owns other property leading sites such as realcommercial.com.au too. It also has stakes in several other international property sites in the US, South East Asia and India.
Is The REA Group Share Price Worth Buying?
REA Group has been one of the best shares to own over the past 15 years as it transformed the real estate classifieds industry and became a real estate giant.
But in terms of the share price, it doesn’t matter what has happened in the past it’s important what is going to happen.
Property experts say that people generally don’t want to sell their property just before an election. If that’s true then REA Group could be about to get a double short term boost.
The first boost is that the election has happened, so there could be a surge of properties to come onto the market. The properties don’t necessarily have to sell for REA Group to benefit – they just have to be advertised.
The other boost is that the election result could boost sentiment about everything to do with property including construction businesses and REA Group.
The combined effect of the two above factors is probably why REA Group’s share price has risen by more than 10% over the past month. The RBA’s potential interest rate cuts and APRA’s suggestion of removing the 7% interest rate buffer may also have helped.
One of the things that I like about REA Group’s longer term potential is its group of investments in overseas regions like Asia and the US, which both have much bigger populations than Australia and therefore bigger earnings potential.
REA Group also seems to have continuing pricing power by being able to implement inflation-beating price increases because of its dominant market position and brand power.
Is REA Group A Buy?
With the REA Group share price sitting at $90 I don’t think the property site business is good value, it’s valued at over 32 times financial year 2020’s estimated earnings according to Commsec. This is too expensive for me.
I would rather buy shares of one of the international growth shares in the free report below.
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