Revenue and profit rocket!

Revenue for 2021 came in at just under £305m. That’s a jump of 48% on 2020. This makes sense given that everything came to a virtual standstill in the latter and Rightmove was required to offer discounts to estate agents. 

For this reason, it’s probably better to compare last year’s numbers with those achieved two years earlier. Tellingly, the former is up 5% on the pre-pandemic £289.3m achieved in 2019. In other words, Rightmove seems to be doing all the right things and getting customers to sign up for more products and package upgrades.

A similar pattern emerges when it comes to profit. Compared to 2020, underlying operating profit in 2021 was 67% higher (£226.1m). However, it was also 6% up on 2019.

Now none of this should really come as a surprise. After all, every prospective homeowner knows just how hot the UK property market has been. For evidence, the average UK house price hit £275,000 by the end of 2021.

The key question therefore, is whether it can continue.

More to come?

Thanks to ongoing innovation in its product offering, Rightmove thinks recent trading momentum is here to stay. That said, it does expect the number of transactions to slow as the housing market “normalises“. That seems infinitely prudent to me. 

Sure, a holding in the FTSE 100 member certainly isn’t without risk. The UK property market may easily go into reverse if the post-pandemic economic recovery stalls (perhaps due to high inflation). Even if the company is confident it won’t be “materially impacted by the property market cycle“, I’d still need to ensure I was sufficiently diversified, just in case. 

There’s also scope for the price to fall further if traders continue to shun growth stocks en masse. Despite today’s uplift, the share price is still down around 17% year-to-date.

An escalation of fighting in Eastern Europe, further news on rising prices and/or some other ‘known unknown’ could quickly erase today’s gains and send stocks crashing down again.

I wouldn’t like to be a trader right now. Thankfully, I’m far more Foolish than that. 

FTSE 100 market leader

I believe that quality counts for an awful lot when it comes to generating great returns over the long term. And, based on its fundamentals, Rightmove is very much a quality business.

Some of the numbers in today’s statement were truly mind-boggling. Property hunters spent an average of 1.5 billion minutes per month on the site in 2021. That’s up from 1.3 billion in 2020 and 1 billion two years ago. Site visits were also up 56% from 2019.

To me, the £6bn-cap has the sort of ‘economic moat’ that most businesses would kill for and Warren Buffett would likely approve of.

Yes, a valuation of 26 times forecast earnings before the market opened may look expensive, given current events. However, I think it’s a price worth paying. Considering its sky-high margins and a bulletproof balance sheet, Rightmove continues to look like a great candidate for a growth-focused portfolio like my own.

The post Here’s why this FTSE 100 growth stock is flying today appeared first on The Twelfth Magpie.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Rightmove. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

As an investor looking to build his wealth over decades, I’m naturally drawn to quality growth stocks to buy and hold. The lure gets even stronger whenever I’m given a chance to load up at reduced prices. With geopolitical tensions rising, I think we could be entering such a period now. 

With this in mind, here are three top-tier titans I’ve got my eye on. 

Croda International

Shares in chemicals firm Croda International (LSE: CRDA) are down almost 30% year-to-date. That’s an awfully big drop for such a great company. While I’m not sure I’d buy just yet, I do get the sense that opportunity is knocking increasingly loudly. 

For the uninitiated, Croda has been around for almost a century. It produces ingredients for manufacturers in the home care, beauty, personal care, and fragrance market. It also operates in the Life Sciences space (providing solutions to protect crops, for example). I can’t see either of these markets ceasing to exist, even if Croda has struggled to grow profits recently. 

On the downside, the shares still look highly valued at 28 times forecast earnings. That’s a bit higher than the company’s five-year average P/E. With investors showing a penchant for (possibly-lower-quality) stocks on cheaper valuations right now, I wouldn’t be surprised if there was more selling pressure ahead.

It’s a bit expensive for me at present, so it stays on my watchlist for now. 

Next

FTSE 100 clothing firm Next (LSE: NXT) is another company whose share price has been struggling. A 15% drop in 2022 so far leaves the stock sitting at a 52-week low and changing hands for just 12 times earnings. That’s a low valuation for a firm that has built a reputation for consistently great returns on capital and fat margins.

Then again, it’s worth considering the wider context. With higher prices pushing many in the UK to watch their non-essential spending, I wonder if things could get worse before they get better. Next month’s Q4 numbers will be pivotal in determining how much the business is suffering. Recent activity suggests investors are already bracing themselves for a few nasties.

Under the stewardship of Simon Wolfson, there’s no doubt in my mind that Next is one of the better companies in the FTSE 100. I’m also convinced it can and will bounce back from this sticky patch. 

Even so, I’m inclined to hold off buying for now. 

Auto Trader

A final FTSE 100 growth stock I’m keeping tabs on is Auto Trader (LSE: AUTO).

A beneficiary of the global shortage in semiconductors and, subsequently, new vehicles, buyers have been flocking to its site even more than usual. Indeed, the clamour for used motors sent the share price rocketing last November.

Unfortunately, the very same stock is down 14% year-to-date. Some profit-taking is understandable. Like Next, however, I wonder if demand could soften as inflation places huge pressure on discretionary incomes. That’s even if supply chain issues are resolved.

Having said this, a P/E of 25 is cheaper than digital peers such as Rightmove and considering its dominance of the industry in which it operates. As such, I’d be prepared to buy Auto Trader hand over fist if things get worse over the next few months. Just like this top investment trust.

The post 3 ‘no-brainer’ FTSE 100 growth stocks to buy if markets keep falling appeared first on The Twelfth Magpie.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Auto Trader, Croda International, and Rightmove. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Great start

Don’t mistake me for some kind of stock market masochist. No one actually enjoys seeing the value of the biggest holding in their Self-Invested Personal Pension (SIPP) fall by a double-digit percentage. In fact, Smithson’s decline has the potential to hurt more than most. given that investors like me have been spoiled by performance for the majority of its existence. 

The small- and mid-cap-focused fund was launched back in October 2018. No doubt helped by its link to star money manager Terry Smith (Smithson comes from the Fundsmith stable and adopts the same strategy), investors were queueing up to throw their money in the ring. And up until recently, this confidence has been richly rewarded. 

From inception to the end of 2021, the trust delivered an annualised gain of 24.5%. That compares very favourably to the 13% achieved by its benchmark — the MSCI World SMID Index. It also more than justified the 0.9% annual management charge, in my opinion.

What’s gone wrong?

The recent wobble may be due to a number of things. First, there’s the issue of valuation. As a quality-focused fund, Smithson doesn’t look for cheap stocks.

Like its big brother, Fundsmith Equity, it targets companies with valuable brands and huge market shares that generate consistently high returns on the money they put to work. This includes property website Rightmove, mixer-drinks supplier Fevertree Drinks and Domino’s Pizza Group. Unfortunately, such businesses are rarely without friends and priced accordingly. That’s fine when markets are behaving themselves. Less so when investors are fretting over earlier-than-expected interest rate rises.

The fact that almost half of Smithson’s portfolio comes from the IT sector probably doesn’t help either. By sharp contrast to last year, companies in this space have now fallen out of favour. Thankfully, Smithson makes a point of avoiding the unprofitable fluff whose share prices are now falling faster than Boris Johnson’s approval ratings. Nevertheless, investors seem to be throwing the baby out with the bathwater.

The aforementioned performance of its shares may have also seen a few profit-takers emerge from the shadows. After all, Smithson’s market-cap had grown to £3.5bn by the end of December. That’s already pretty large for a trust that is designed to invest in companies lower down the food chain. In fact, the median size of business in the portfolio is actually £10bn! Moreover, manager Simon Barnard’s investment strategy is still to be comprehensively tested and some people may be getting out while the going’s good.

Loading up for the recovery

While I wouldn’t mind being proven wrong, I certainly don’t expect Smithson’s annualised return to remain at the percentage it stood at in December. As a fuss-free way of accessing high-quality businesses from around the developed world however, it still strikes me as a perfect core holding.

I believe that good businesses tend to outlive bad ones. I also regard myself as a long-term growth investor. As such, it makes sense for me not to panic about Smithson’s sticky patch just yet.

The post Top investment trust Smithson is flagging and I’m buying appeared first on The Twelfth Magpie.

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Paul Summers owns shares in Smithson Investment Trust and Fundsmith Equity. The Motley Fool UK has recommended Dominos Pizza, Fevertree Drinks, and Rightmove. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

November looks like being a busy month for investors with a large number of the UK’s biggest companies providing updates on trading. Here are three FTSE 100 firms whose statements I suspect will be positively received.

Huge demand

Online vehicle marketplace Auto Trader (LSE: AUTO) is down to reveal its latest set of half-year numbers of 11 November. Based on the ongoing scramble for second-hand motors, due to the global shortage of computer chips for new cars, I’m struggling to imagine why the figures will be anything less than impressive. The question I’m asking therefore, is whether all this positivity is already baked into the share price.

I’m not so sure it is. AUTO’s stock is up just 5% in the last 12 months and currently changes hands for under 26 times earnings. Yes, that’s hardly cheap. However, I still think it’s reasonable for a company that, like its property equivalent Rightmove, has a clear stranglehold on its market. According to the firm, browsers spend seven times more time on its site than their nearest competitor.

Naturally, there will come a time when supply chains are fixed and market dynamics change. The potential for a protracted period of inflation may also push potential buyers to delay their next car purchase. Regardless, consistently high returns on capital and sky-high operating margins keep me bullish on AUTO for the long term.

Contrarian pick

A second FTSE 100 member that could push higher next month is luxury brand Burberry (LSE: BRBY). While I’m wary of being biased here (I hold the stock), I do think the recent confirmation of a new CEO has helped to reassure an already-skittish market.

If this can be backed up with some comforting but not necessarily outstanding interim numbers on 11 November, BRBY shares may be able to breach the 2,000p barrier. Now that its physical store estate is back up and running, I’m inclined to be optimistic.

Of course, a full recovery will take time. It will also depend greatly on what the fashion world/market thinks of Jonathan Akeroyd’s plans for the brand when he takes up his post in April. In the meantime, a resurgence in Covid-19 infections and hints of a return to lockdowns could put the brakes on any progress. 

So while I believe the stock could move higher next month, I’m also keeping my expectations in check.

FTSE 100 value stock

A final FTSE 100 stock I’ll be watching is insurance firm Aviva (LSE: AV). Its shares are up 51% in the last 12 months as (some) confidence has gradually returned to the UK economy. Investors also appear to be impressed by CEO Amanda Blanc’s strategy for streamlining the company. Recent news that it achieved its best half-year sales in General Insurance for a decade was warmly received too.

However, like AUTO and BRBY, nothing can be taken for granted. Regardless of a bullish Q3 update on 11 November, the shares could still slide on global growth concerns. This includes the drawback of holding a stock whose fortunes will always be determined to some extent by wider market sentiment.

Notwithstanding this, it could be said that AV’s current valuation takes this into account. A P/E of less than nine times forecast earnings looks like a bargain to me. A chunky 5.6% dividend yield, based on analyst projections, is also attractive as higher prices bite.

The post 3 FTSE 100 stocks to buy before November appeared first on The Twelfth Magpie.

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Paul Summers owns shares in Burberry. The Motley Fool UK has recommended Auto Trader, Burberry, and Rightmove. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

FTSE 100 market leaders

The first stock on my shopping list would be Auto Trader. Operating completely online (the print version was ceased years ago), the FTSE 100-listed vehicle marketplace is the clear market leader. Apparently, more than 75% of all time spent looking at car adverts is on the company’s site. I suspect this figure might be even higher now following the scramble for second-hand motors due to the global chip shortage.

The other leader is property portal Rightmove. Like its automotive equivalent, this FTSE 100 constituent is the go-to destination for buyers and renters. For years, competitors have tried but failed to take meaningful market share, suggesting RMV’s brand serves as a great economic moat. Throw in a bulletproof balance sheet and (like Auto Trader) spectacular returns on capital, and RMV would be a compelling purchase for me.

There are still things to be aware of, of course. The vehicle and housing markets in the UK should moderate in time and could even plummet in the event of a serious economic wobble. Moreover, I don’t expect either company to ever be screamingly cheap, since quality rarely lacks friends. So I’d need to stay realistic with my target purchase price.

Luxury brand

Third on my list of FTSE 100 to buy is luxury brand Burberry. This may seem an odd choice, especially as the company still hasn’t recovered from the coronavirus crash. Moreover, the recent fall in retail sales in China doesn’t exactly bode well. After all, BRBY is hugely dependent on shoppers continuing to buy into its highly-coveted brand.

As an existing owner, I’m not worried. Burberry’s long history (and sound finances) clearly mark it as one of the FTSE 100’s most resilient members and one I’d continue to buy in a correction.

Notwithstanding this, it’s important for me to monitor just how much exposure I’d have if I continued to buy on a correction. Too much money in one company’s risky. I want to sleep at night!

Then again, all this may prove immaterial. I still reckon BRBY will be bought out before long. 

Priority buy

Last of my FTSE 100 buys would be a stock I once owned and stupidly decided to sell too soon. Health and safety tech firm Halma‘s share price has rocketed since. As I type, it’s up 36% in the last year. Anyone buying five years ago would have tripled their money. 

Still, a forward P/E of 50 suggests shares are now priced to perfection. Yes, Halma operates in a highly defensive sector. And yes, a multi-decade history of hiking dividends is nothing to be sniffed at. However, there comes a point when it’s wise to pull back from a purchase if I feel I’d be overpaying.

This is why the HLMA remains on my watchlist, for now. When the next correction inevitably comes, I want to have some dry powder ready… 

The post 4 FTSE 100 stocks I’d buy during the next market correction appeared first on The Twelfth Magpie.

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Paul Summers owns shares in Burberry. The Motley Fool UK has recommended Auto Trader, Burberry, Halma, and Rightmove. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

This was largely down to the FTSE 100-listed property portal giving estate agency and housebuilding customers discounts to see them through April to September last year. Operating profits fell 37% to £135.1m, with margins shrinking from 74% in 2019 to 66% in 2020.

The Rightmove share price is still up an impressive 54% over five years, but the future looks bumpy and the stock is expensive.

Property up, portal down

Rightmove’s generous share buybacks totalled £148.8m but were put on pause in the pandemic, and investors got just £30.1m in 2020. On the plus side, they will resume next month. The dividend is already back, with a final payout of 4.5p. Customers have been loyal, with membership down just 3%. The site still boasts more than one million UK residential properties, up 100,000 on last year, more than any other portal.

The Rightmove share price could get a boost if Chancellor Rishi Sunak extends the stamp duty holiday in next week’s Budget as most people expect, which should delay or prevent a sharp housing market slowdown.

Management no doubt made the right decision by giving customers discounts to keep them sweet, and will hopefully be rewarded if and when normality returns. However, I think the Rightmove share price will come under added pressure if employment rises sharply after furlough. With the stock trading at 32.3 times forecast earnings, it looks too expensive for me.

Commodity supercycle dawns

Right now, I would prefer to buy a company with stronger growth and income prospects, and there seem to be plenty around in the mining sector. The Anglo American (LSE: AAL) share price jumped 3.94% yesterday after it posted better-than-expected full-year profits and hiked its dividend. EBITDA earnings did fall 2% to $9.8bn, but that was better than the $9.4bn total that investors had anticipated.

Other numbers were even more positive. Anglo American lifted the final dividend 53% to 72p a share, while rising commodity prices generated enough cash to pay down $2bn off its net debt, reducing the total to $5.6bn. The De Beers owner recovered from falling diamond sales in the first half, with consumer demand for jewellery improving in China, and even the US. Iron ore and copper demand is strong.

Rightmove share price doesn’t tempt me

If the global economy explodes out of lockdown and we enjoy another ‘roaring twenties’, this £38bn mining giant could benefit. That is a big if, of course. If today’s lockdowns are extended due to mutant Covid variants, demand could slump.

My other worry is that the Anglo American share price has flown so high that it will be hard to maintain the momentum. It is now up an incredible 599% over five years, and 46% over 12 months. Yet it trades at just 8.2 times forecast earnings. That tempts me far more than today’s fragile Rightmove share price.

The post The Rightmove share price doesn’t tempt me. I’d rather buy this FTSE 100 stock appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Rightmove. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Only a week or so after being the first US company to pass the $2tn mark, Apple’s value has now increased to almost $2.3tn. To put this in perspective, the Cupertino-based giant is now worth more than all the companies in FTSE 100 combined.  

With this in mind, does avoiding the UK’s top tier and buying the iPhone maker’s shares instead make sense? Momentum-jockeys would say so. I don’t think the answer is quite so straightforward. 

Apple shares: worth buying now?

Sure, there are a number of reasons to think Apple’s shares could go even higher. 

For one, it doesn’t look like the coronavirus will be leaving us anytime soon. This being the case, we can probably expect more home-working — and subsequent demand for Apple’s products and devices — in the months ahead. Speaking of which, the rumour mill suggests we’ll see new iPhone, Apple Watch, iPad, Airpods and MacBook Pro launches before the end of 2020.

Aside from this, you have the coveted brand (ranked the third most-valuable in the world back in January) and ‘sticky’ products. Once you’ve entered the company’s ecosystem, it’s hard to leave. No wonder Warren Buffett is a big holder of Apple shares given his preference for companies with strong ‘economic moats’.

In sharp contrast, the FTSE 100 contains lots of stocks no one is chomping at the bit to own.

What’s so bad about the FTSE 100?

It’s to be expected that an index based on size rather than quality is bound to include a few duds. Nevertheless, the fact remains that only a proportion of the index are truly great businesses based on their ability to compound investors’ money. For every Halma, you have a battered bank, oil company or tobacco stock with limited growth propsects. For every Rightmove, you have a company with a truckload of debt. While some members have resumed dividends, many are still to do so. 

Then again, I do think parts of the FTSE 100 offer better value compared to Apple shares at the moment. While the coronavirus has savaged sales, premium spirit maker Diageo and luxury fashion brand Burberry look great contrarian buys. This is unless you think the pandemic has completely altered our drinking habits and desire to show status. 

Taking the above into consideration, I don’t think the choice between investing in Apple shares or the FTSE 100 is ‘obvious’.

Here’s what I’d do

If buying Apple shares while they’re ‘hot’ feels like too much of a gamble at present, you could always buy a fund that has a significant holding in the company instead. An example of this would be Polar Capital Technology Trust.

In addition to having 9.6% of its assets invested in the company at the end of July, Polar also has holdings in titans such as Microsoft, Alphabet (Google) and Amazon. Naturally, this won’t protect you from another market crash. However, knowing your money is spread around other companies should help calm your nerves.

With any remaining money, I’d be inclined to grab whatever quality you can find in the FTSE 100, especially if it’s trading on a bargain valuation.

The post As Apple exceeds the FTSE 100’s value, should UK investors buy its shares? appeared first on The Twelfth Magpie.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Paul Summers owns shares of Burberry. The Motley Fool UK owns shares of and has recommended Alphabet (C shares), Amazon, Apple, and Microsoft. The Motley Fool UK has recommended Burberry, Diageo, Halma, and Rightmove and recommends the following options: long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short January 2022 $1940 calls on Amazon, and long January 2022 $1920 calls on Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The UK’s largest property portal has reported a sharp increase in activity, as pent-up demand is unleashed and owners rush to buy a new home after tiring of being locked down in their old one.

This should help underpin the Rightmove share price. However, I can’t help worrying that investors have got too excited today. The FTSE 100 company’s revenues fell 34% year-on-year, reflecting the impact of its 75% discount on customer fees between April and June.

FTSE 100 growth star

Average revenue per advertiser fell by the same percentage, from £1,077 to £712. That’s a blow. But at least it’s helping to keep customers on the site. Investors are clearly hoping this was a one-off hit, and the Rightmove share price will hold firm as Britons go property crazy once again. 

Operating profits were 43% lower at £61.7m, despite a 7% reduction in operating costs to £33.1m. Still, making any kind of profit in the first six months of this unprecedented year is an achievement. The group had £50.3m in cash at 30 June, which is up from £36.3m at the end of last year.

Current housing market buoyancy may not last though. Furlough is due to end in October, hitting buyers in the pockets. On the other hand, that might lead to an increase in forced sellers, boosting site activity (albeit for the wrong reasons).

Rightmove isn’t paying any dividends at the moment. However, management said today it remains committed to returning all free cash flow to shareholders through dividends and share buybacks as soon as “prudent”.

We don’t know when that will be, of course. Rightmove doesn’t feel able to issue forward guidance at the moment, although it’s hardly alone in that.

The Rightmove share price is expensive

The extension of the Help to Buy scheme and record low mortgage rates should keep the property market ticking over. What happens after that depends on the shape of the recovery. The stamp duty holiday is due to end on 31 March, and that could depress activity from January.

The Rightmove share price trades 15% higher than a year ago, which compares well to a 17% drop on the FTSE 100 over the same period. The site retains a dominant market position, with a 50% listings lead over its nearest competitor. This gives it welcome pricing power and allows it to shrug off estate agent grumbles about costs. They’ve joined forces to launch OnTheMarket as a competitor, but Rightmove is top dog for now.

My big worry is that the Rightmove share price looks pricey, giving current uncertainties. It trades at almost 50 times forward earnings.

The post The Rightmove share price is up 7% today as house prices climb. Here’s what I’d do now appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Rightmove. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

That said, the reaction to today’s trading update isn’t quite so great. Why is this? And am I worried?

Rightmove in demand

First, the good news.

Today, the £5bn cap company said that demand for its services had been strong. Indeed, its platform had seen 10 of its busiest days ever since 13 May (when the government permitted agents and developers to reopen). Weekly email updates are receiving an average of 800,000 views and the number of properties being listed is also rising — up “over 10%” in the last week compared to this time last year.

In addition to this, the FTSE 100 constituent said that house sales in England were 10% higher than they were one year ago.  Of course, some of this may be down to deals finally completing after being on hold during lockdown.

So, why are the shares down?

There are a few likely reasons.

First, Rightmove did report a 3.8% fall in its membership base (to just over 19,000) since the end of 2019. It attributed this partly to agencies having cash flow problems as a result of the pandemic, although ‘traditional’ agents seemed to be weathering the coronavirus storm so far. 

Second, Rightmove announced today that it would continue to give discounts to agencies beyond the 75% offered from April to July. A 60% reduction will be given to customers in England in August, falling to 40% in September. Those in Wales, whose market reopened yesterday, will still get a 75% discount for August and 60% for September. Agents in Scotland are getting the same terms. Its market opens next Monday.  

While this should appease customers, it’s not ideal for Rightmove’s top line. Extending this support will likely hit revenue by £17m-£20m. This is on top of the £65m-£75m impact already predicted.

Third, the company’s ongoing unwillingness to provide guidance on its outlook for profits, while prudent, may also have frustrated some.

This decision, however, makes complete sense to me. It’s early days in terms of the recovery and we could still see markets fall should we get a second wave or the economic damage is worse than thought. House prices are already expected to fall 5% this year.

Happy holder

Rightmove’s shares are down by 3.5% as I type.

Not that this concerns me. Rightmove remains the clear leader in what it does with an 85% market share and, according to the company, over 50% more listings in the UK than any other source. That’s a powerful advantage that competitors have hitherto failed to erode.

Moreover, it seems the company is doing all it can to mitigate the impact of coronavirus on its finances. Despite having net cash on its balance sheet, management has taken salary cuts and a third of employees were furloughed back in April.

And even if we do get a second wave, Rightmove will be prepared. Its tool to help agents provide online viewing videos has already proved popular, as have advice webinars for both agents and house hunters.

Taking all the above into account, I’m happy to continue holding this quality business. I’ll even consider adding to my position should today’s fall mark the beginning of another period of volatility for the share price.

The post Top FTSE 100 stock Rightmove is down today. Here’s why I’d buy more appeared first on The Twelfth Magpie.

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Paul Summers owns shares in Rightmove. The Motley Fool UK has recommended Rightmove. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

So, what sort of strategy should someone adopt if they have the full allowance to invest but only want to pick from the UK’s biggest companies? Here’s my take.

Buy ‘quality’ FTSE 100 shares

While it’s too soon to know the full economic cost of the coronavirus, one way of mitigating its impact on your wealth is to seek out quality stocks. 

Now, it would be a mistake to assume that all FTSE 100 shares are worthy of your cash. A company can be huge (and trading on a cheap valuation) and yet actually be a very poor investment if, say, it operates in a crowded sector. Poor earnings growth, high fixed costs, and big debts can also hold it back. 

My preference, therefore, is for companies with great brands, sound balance sheets, and/or large market shares. I’m also looking for firms that earn above-average returns on the money they invest in their businesses. Think of this as their own ‘interest rate’, just like you’d get with a savings account. Anything above 20% or so, gets my attention. 

This is why I own a stock like Rightmove. It’s suffering in 2020, but I’m confident that boasting the above qualities will help it bounce back, in time. 

Diversify (but not too much)

Buying quality still counts for little if you’re only investing in one or two parts of the market. You don’t need me to tell you how horrific 2020 has been so far for those companies operating in the airline sector (easyJet, IAG) and the oil industry (Royal Dutch Shell, BP). Spreading your cash around is prudent. 

Having said this, it’s also a fact that the more FTSE 100 shares you hold, the more closely your portfolio will resemble the index. That’s problematic, because the goal of stock-picking should be to beat the return of the index, not replicate it. You may as well buy a cheap exchange-traded fund, accept the market return, and do something else.

Another reason for buying only your best ideas comes down to management. The larger your portfolio, the more time and energy you’ll need to expend staying in touch with your holdings.  

Expect volatility

Pick up any financial paper at the moment and you’ll get a mish-mash of people saying that stocks will hang on to their recent gains and others saying that we’re heading for another leg down. To save you pondering things any further than you need to, I can confidently say it’s pretty much impossible to know with any certainty. 

What I think we can expect over the next few months is volatility. This being the case, it may be worth investing your money in installments. Pound-cost averaging (investing the same amount on a monthly basis, for example) into FTSE 100 stocks is psychologically much easier than investing all in one go. It should also help to smooth out returns over time. 

The post Have £20k in your ISA to buy FTSE 100 shares? Here’s what I’d do now appeared first on The Twelfth Magpie.

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Paul Summers owns shares in Rightmove. The Motley Fool UK has recommended Rightmove. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.