Rightmove.co.uk is the largest online property portal in the UK. It was formed in 2000 when the top four corporate estate agencies collaborated to create the platform. It floated on the London Stock Exchange in 2006 and is now a fully fledged FTSE 100 incumbent with a market cap above £5bn.
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As I write, Rightmove shares are trading for 640p. At this time last year, the shares were trading for 613p, which is a modest 4% return over a 12-month period.
Two primary risks that could hinder Rightmove’s progress currently and in the future are that of rising interest rates and competition. Firstly, rising interest rates could cool the current white-hot housing market. Many buyers could be put off higher mortgage rates and wait before buying to see if interest rates come down once more.
Secondly, competition in the online property platform market is intense. Although Rightmove is a staple name, many competitors have emerged and are jostling for domination and site traffic, as well as sign-up revenue.
Both of these factors could affect Rightmove, which could see its traffic levels, sign ups, and performance affected.
A FTSE 100 stock I would buy
Certain industries have certain brand names that resonate with most consumers. Rightmove possesses this competitive advantage in respect of property, in my opinion. A similar example of this is when looking for a new car. Many people instantly go to fellow FTSE 100 incumbent Auto Trader’s platform. Due to Rightmove’s profile, property seekers and estate agents (who pay to use the popular platform) use Rightmove as the go-to platform, giving it significant pricing power.
Rightmove will benefit from the current burgeoning housing market in the UK. Current demand for housing in the UK is outstripping supply by some margin. Many are looking to get on the property ladder for the first time. The UK government scrapped stamp duty for a period last year, which boosted the market as a whole too. Rightmove recently reported house prices are at their highest levels since 2016. The current market, and Rightmove’s position, should help boost performance.
I always look at recent past performance. I do understand that past performance is not a guarantee of the future, however. Looking back at Rightmove’s performance, I can see that revenue grew year on year for three years before 2020, which was affected by the pandemic and stock market crash. Coming up to date, Rightmove released a trading update in July. This was a half-year report for the six months ended 30 June 2021. Revenue and operating profit were up compared to the same period last year. It also paid an interim dividend, which is a bonus.
I genuinely believe Rightmove is a no-brainer FTSE 100 stock to add to my portfolio. At current levels, I would add the shares to my holdings. It is a leader in its field and currently operates in a burgeoning housing market. It possesses a competitive advantage and pricing power, has a good track record of performance, and pays a dividend.