I am with you on your hesitation. A good staring point is that...

I am with you on your hesitation.

A good staring point is that REA is a high quality company, proved over 2 decades and through the industry cycle. As to a decision to buy or not the touchstone should be what value you are getting? REA is certainly a high PE company, it meets your Uncle's criterion!

PE's tell you something but they capture such a small part of the company's financial status. In general though, the lower the PE you pay (for a given company) the more chance you are getting value. REA at a PE of 34 on the 23rd of March ($65/share), is clearly better value than the PE of 50 being offered 6 weeks later yesterday at $96/share. (My PE's a re calculated on the 2019 calendar year).

I suspect though, in reference to PE's, your Uncle isn't saying you should invest in REA at PE of 50 by preference, that would be a wealth hazard. I assume he prefers "growth" attributes, and those companies are often characterised by having high PE's. There is no reason that high growth companies cannot be good value, it's just that value is easier to assertain when there is an established business model and a long history of earnings and growth, as REA has.

PE is sometimes easier to understand if you invert it and look at the earnings yield, that is earnings/price. A P/E of 50 is an earnings yield of 2%. So for every $1 you spend buying into REA today you get 2c of annual earnings. You need to be fairly confident about growth and business duribility with those sort of returns, paticularly considering the "risk-free" 15 yr Australian bond rate is at 1.5% currently.

I like your process in highlighting red flags. When doing so be careful of what Steve Johnston of Forrager Funds referes to as the "narrative bias", that is that does the argument you make apply at any price? For example, if I were to say that "there has been a large fall in unemployment which will impact on the housing market and therfore REA revenue", that statement would be applicable whether REA was currently trading at $40, $80 or $120. At some point you have to factor your assumptions into valuation and accordingly the price you are prepared to pay. The safer option is to work out what the valuation is, rather than missing out on the "next big revaluation higher"

I have kept an eye on REA for more than a dozen years. It has lots of qualities that I think will endure through my investing lifetime. I ummed and ahhed in 2015 and decided to let it pass (to my detriment). The price didn't reach my price range in March. I wont give up though, I have also followed ARB for a similar time frame and was able to buy at good value recently but 10 years is a long time to be patient.