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Bonds Are a 'Safe' Investment: A Big Lie Gets Even BiggerThe NEXT company in my continuing series of the top 25 stocks for the NEXT 25 years is Move, Inc (NASDAQ: MOVE) Move is headquartered in Los Angeles, California and operates several strategic web sites for consumers looking to buy or sell a home. The stock is trading at $4.20 and carries a market capitalization of $650 million. This company has an opportunity to become the absolute dominant player in the real estate on-line market..
The consumer real estate market has become an on-line search process first and foremost. Currently, 80% of all real estate searches begin on-line and yet only 5% of the advertising and marketing dollars spent are dedicated to the on-line channel. This dichotomy is changing as more budgets from real estate firms and agents are migrating to the on-line channel. Traditional forms of advertising and marketing, such as newspaper and local radio, will witness those dollars moving on-line.
MOVE operates a major web site titled Realtor.com that consolidates the 2.1 million residential listings nationwide. Any consumer can find a home in their price range in almost any zip code across the United States. Realtors can buy any number of user-friendly products from MOVE from their own customized web site with MOVE serving as the host to customer relationship management products and other vital marketing tools. The realtor pays an annual fee to MOVE to be listed within its network.
Move has also expanded its offering to the consumer market by showing various rentals available around the country and specific properties that are more for investment purposes. Move charges advertisers on a local, regional and national basis. Move has a current market share in the on-line real estate search market of 27-28%, a good 2 1/2 times its nearest competitor. Move has a strategic relationship with Yahoo (NASDAQ: YHOO) and AOL as it serves as their exclusive real estate search site.
One important point of explanation as it is critical to understanding the Move story. The declining real estate market is good for Move. Real estate agents tend to spend more money on advertising and marketing during the tougher real estate markets. Move actually is a benefactor in tougher times.
Move owns a popular brand called the Welcome Wagon. What use to be a knock on the door from the local Welcome Wagon person is also migrating to the web. It allows for local businesses to market and sell various local products and services to the new home owner. From insurance products to local trash collection services, the Welcome Wagon is a point of leverage for Move to generate higher revenues from vendors not traditionally involved in the direct real estate space.
Move has a current revenue base of $300 million for 2007 and should see growth accelerate to about $370 million in 2008.. Earnings per share are now positive at $.03 for this year and jumping up to $.16-.20 for 2008. Move has done all the heavy-lifting to establish itself as the dominant player and the reward of higher margins and profitability are just beginning.
The company has an opportunity to expand the real estate search sector and dominate that sector. The company could grow to multi-billions in revenues and of course market capitalization as well...
Georges Yared is the CIO of Yared Investment Research where he explores more growth stock ideas.
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