REA having a bear market rally?, page-54

I still think people underestimate how bad the housing downturn can be.

I think out of the equities I am following, I have the highest conviction that REA will derate the most. The housing sector is the most exposed to interest rates. This is not a one or two-quarters event. This will be at least an 18-24 months housing event. Also, I feel Australia is well behind New Zealand and the USA's in terms of inflation, and potential housing downturn. This will reduce the housing sales, and ad revenue with time.

REA is very expensive by any metric. I have given my analysis previously about why this is very expensive with metrics like PS, PFCF, PEG etc. Also, this has already tested 90 dollars just a few weeks ago. Do we honestly think we at the bottom when the FED is thinking whether to increase by 75 basis or 100 basis points in a week. Growth stocks will be valued differently after the RBA and FED are done. I feel the majority of the stocks in ASX have at least derated in terms of multiple compression and maybe to some degree to an expected downturn in earnings. REA is yet to do any of that.

Could I be wrong? Sure. But then the upside of this down the track is very limited. Not at a PE of 40 and when the risk-free return is not 0.