The FTSE 100 index is studded with great stocks to buy and hold for the next decade. In fact I have bought a number of them for my own portfolio. But even among these, some stocks look more promising for me than others. Typically, this is because of the structural changes in their favour. One example is online property marketplace Rightmove (LSE: RMV).
Strong structural story
The company provides a convenient place for both buyers and sellers or tenants and property owners to find each other. I have referred to it more than once when moving houses, and it has been a positive experience for me as a consumer. That ticks one box for me. But there is of course much more to the stock. Importantly, the world has become far more comfortable with buying and selling online than it was before the pandemic. The e-commerce industry is only expected to continue growing over the course of the decade. This should impact all kinds of online shopping platforms positively, including Rightmove.
Rightmove posts good results
But there is even more to the stock. And that is its strong financials. The company just released its full-year 2021 results earlier today, which are quite good. Its revenue is up by 48% from 2020 and its earnings per share (EPS) are up by 69%. This level of increase is probably an outlier though. Rightmove mentions that during April and October 2020, “exceptional Covid customer discounts” were provided. Even then, the company has grown since 2019, the last pre-pandemic period. Its revenues are up 5% and EPS has increased by 9%.
Slowing property markets could impact the FTSE 100 stock
During 2022, there could be a few speed bumps for the FTSE 100 stock. The number of transactions is expected to revert to pre-pandemic levels, which I expect could impact its revenue growth. The last couple of years have been good for the housing markets because of government relief provided to keep the economy buoyed during the pandemic. However, much of this support has now been withdrawn as the macroeconomic environment normalises. Also, it is a relatively expensive stock. It has a price-to-earnings (P/E) of around 31 times after its latest results according to my calculations. This is almost double that for the FTSE 100 index as a whole.
What I’d do now
Yet, Rightmove looks like a really good stock to me for the long term. In fact, even the downside to the stock is not a big deal to me. Economic recovery is underway, which I think could still be positive for the property markets, even though there could be some correction in the short term after the boom seen in the past couple of years. As far as its valuations go, I think for a stock backed by a strong structural story, valuations may well remain high. It is rare that a healthy FTSE 100 stock with growth potential ever trades at low levels. If I had not bought Rightmove shares already, I would buy them now and hold them for 10 years.
