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right movement (LSE: RMV) stocks are often ignored by retail investors. This surprises me a bit, as they have been a very good long-term investment.
Here, I’m going to see how much I would have today if I had invested £5,000 in the FTSE 100 bag a decade ago. Let’s break down the numbers.
a great investment
10 years ago the shares were trading at 179p (after taking into account the 10/1 stock split that happened in 2018). Today, however, they are changing hands for 563p. That represents a gain of about 215%.
This means that if I had invested £5,000 in the company at that time, my investment would now be worth approximately £15,700. That is a good result. It represents a gain of just over 12% per year, a much higher return than the FTSE 100 index has generated.
At one point, my investment would have been worth much more. As of early 2022, Rightmove shares were trading around 800 pence. Back then my £5k investment would have been worth around £22.5k.
It’s worth noting that Rightmove has paid a small dividend almost every year for the past decade. So I would have also made a little passive income over the years, along with my capital gains.
A high quality business
Looking at these numbers, there are several conclusions, in my opinion.
One is that it really can be profitable to focus on “quality” when investing in stocks.
Rightmove is a high quality business. For starters, it has a strong brand and a high market share. It is usually the first place people go when looking for a house in the UK.
Rightmove continues to be the place people turn to and return to first,
averaging more than 1.35 billion minutes on our platform each month in 2022.Rightmove CEO Peter Brooks-Johnson
Second, it is very profitable (it is one of the most profitable companies on the FTSE 100). Over the past three years, the return on capital employed (ROCE) has averaged 233%.
Third, it has a strong balance sheet with minimal debt. In general, it has many quality attributes.
Another conclusion is that valuation is not everything. Rightmove has never been a cheap stock. It has always had a higher rating. However, that hasn’t stopped it from delivering excellent market-beating returns for investors.
Finally, these calculations show the power of investing for the long term. Over the last decade the UK stock market has seen many ups and downs. Brexit, Covid and the energy crisis in 2015 dragged stocks down significantly. However, Rightmove shares have still managed to generate a return of more than 12% per year during this period.
Rightmove share today
Is it worth buying the stock today? In my opinion, yes. I think the stock price can continue to go higher from here.
They are not without risk. For example, a proper housing market crash in the UK (like 2008-09) could cause shares to fall.
However, in my opinion, the British are not going to lose interest in real estate any time soon. Therefore, the company’s platform should remain popular.
And with the arrival of a new CEO this month (who has vast experience growing businesses), there are reasons to be optimistic about the outlook.
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