The stocks for the US online retailer are often held up as a shining example of buy-and-hold investing. But there’s an Australian company that’s outperformed that.
The post Better than Amazon: This ASX share has multiplied 910 times in 20 years appeared first on The Motley Fool Australia. –
Amazon.com Inc (NASDAQ: AMZN) shares are a pretty amazing testament to the power of buy-and-hold investing.
According to Google Finance, the stock was US$6.78 in November 2001, just after the dot-com crash. Now, almost 20 years later, it’s trading at US$3,631.20.
That’s a 535-multiple increase.
In other words, if you had bought $10,000 of Amazon shares in November 2001, you would now be sitting on $5.35 million.
As a world-famous online retailer, Amazon is often cited as the classic example of how stocks can make you wealthy.
But did you know there’s an ASX share that’s done even better over that time?
Amazon and REA has very similar beginnings
Coincidentally, REA Group Limited (ASX: REA) was born in the same year as Amazon — in 1995 — as realestate.com.au.
That’s not where the similarities end, according to Montaka Global Investments senior research analyst Amit Nath.
“Just like the great tech tales of Silicon Valley, our Aussie protagonist, REA Group, was started in a garage (1995), IPO’d just before the dotcom bust (1999) and lost 90% of its value shortly thereafter (2001).”
But the difference after that was Rupert Murdoch’s News Corporation (ASX: NWS) came to the rescue before REA Group was run completely into the ground.
And it’s ended up as News’ best investment in recent decades.
“News Corp took 44% of REA Group in exchange for $2 million in cash plus $8 million worth of TV and print advertising — giving REA Group a total equity valuation of $23 million,” Nath wrote on a Montaka blog.
“Fast forward 20 years to today and News Corp owns 61% of REA Group, which has a market capitalisation of $21 billion — or 910 times the valuation Murdoch paid in 2001.”
So there you go. An investment that’s multiplied 910-times over, in the same time that Amazon shares multiplied 500 times.
If you had $10,000 worth of REA shares after the dot-com bust, you’d now be all smiles with $9.1 million.
REA shares still have excellent prospects
Like Amazon, Nath believes REA Group is still a great investment in current times.
Due to its market dominance, Nath believes Australians have no choice but to continue using realestate.com.au.
“It is impossible to function as a real estate agent (or broker) without a subscription to REA Group’s professional tools and access to its property listing portal,” he said.
“As REA Group continues to reduce friction costs of buying, selling, and renting properties for customers, it is likely to capture a larger share of transaction economics over time.”
After all these years, REA Group is still the primary driver for News Corp’s growth.
And the hot residential real estate market at the moment continues to feed into the company’s revenue pipeline.
REA shares closed the week at $162.45. Goldman Sachs elevated its price target to $198 only on Friday.
That’s a 22% upside for a stock that’s trading at a 154.85 price-to-earnings ratio.
Nath said he believes “REA Group will continue to be a wonderful investment over the long term”.
“We believe in owning the long-term winners in attractive markets while they remain undervalued — we firmly believe REA Group comfortably fits within this criteria.”
The post Better than Amazon: This ASX share has multiplied 910 times in 20 years appeared first on The Motley Fool Australia.
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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. Motley Fool contributor Tony Yoo owns shares of Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool Australia has recommended Amazon and REA Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.