It's funny how much emphasis the market puts on the short term profit outlook of a company. The property market has been in decline for around past 6 months and still REA was able to increase profit by 20%. Sure, the property market is probably going to decrease further before we hit the bottom, and who knows perhaps REA will have a stinker of profit next year and perhaps 0% profit growth (although I doubt this because management still expect costs to reduce greater in % terms that revenue). But there is no more certain thing that at some stage, the real estate market will turn and we will look back at this as a very abnormal downturn for the real estate market i.e. when was last real estate decline - sometime in the eighties I believe. And when the property market does eventually turn, I don't believe you will be able to buy REA shares at these prices. Don't forget this stock's share price has increased 36% per annum for last 10 years. It would be difficult to find another major stock on ASX that has generated this kind of wealth for their share holders.
REA Price at posting:
$72.69 Sentiment: Buy Disclosure: Held
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