When it comes to high-growth real estate stocks, few can compare or compete with CoStar Group (CSGP 0.00%). This digital real estate data provider is involved in virtually every aspect of real estate. He owns popular real estate listing websites including Loopnet, Ten-X, Apartments.com, Homes.com, and Homesnap, among others.
Over the past decade, the stock has jumped 777%, delivering an annualized return of around 24%, nearly double that of the stock. S&P500. Its latest results, released on July 26, 2022, showed promising results for the company exceeding analysts’ expectations, sending its share price jumping 19% over the past week.
If you’re looking for a valuable growth stock that continues to deliver strong results in a tough market, here’s why you should consider the CoStar Group.
Opportunities for growth abound
One of the main reasons CoStar has achieved such tremendous results over the past decade is its acquisition of established online platforms. Since 2020, CoStar has spent $600 million acquiring Ten-X, Homesnap, Homes.com and Emporis, which has helped it diversify into residential, distressed and international real estate markets.
2021 was its first year in the residential market, with HomeSnap and Homes.com generating $75 million in new revenue for the company. CoStar believes it is falling far short of the addressable market and has used aggressive marketing efforts to increase the number of users and revenue from these sites.
It also just launched CitySnap, a New York City-focused registration platform that is expected to bring new business to the company. It also has $4 billion in cash to help with its expansion efforts. Even after deducting his outstanding amount of about $1 billion, he still has $3 billion left to use for shopping in future years.
Performance remains solid
In Costar’s fiscal 2022 fourth quarter, its results were positive, with net bookings on its websites up 66% year-over-year. The company eventually increased its turnover by 12%. It has also increased its earnings before interest, taxes, depreciation and amortization (EBITDA) by 25% and earnings per share (EPS) by 40% over the past year.
Quarter after quarter, the company is breaking business activity records with Apartments.com and Loopnet.com, with its data services through CoStar Group leading the way. With growing concerns about the impact of a real estate downturn and recession, investors should remember that the CoStar Group was able to set new sales records at a very turbulent time in the real estate market over the past few years. .
Commercial real estate, the sector to which CoStar is most exposed, was on difficult ground at the start of the pandemic, with many sectors still struggling to fully recover. Now that CoStar Group has expanded its presence in the residential sector, a decline in traffic to its sites due to a recession or reduced buying interest would certainly hamper growth, but it would not completely stop the business. . In addition, it has enough cash to launch its activities and continue its expansion.
Unlike most other tech stocks, CoStar Group wasn’t hit hard by the tech crash. It’s only down 17% in the past year, while many other real estate tech stocks, like Zillow and red fin, are down 64% or more. Today, its price-to-earnings ratio (P/E ratio) is 86, which is high but lower than many other growth tech stocks like You’re here, Amazonor Zillow.
The CoStar Group will likely continue to grow its business, using its cash to fuel new acquisitions and pump cash into existing platforms. If you’re looking for a stock to build on its positive momentum during market volatility, CoStar Group is a clear buy.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a board member of The Motley Fool. Liz Brumer-Smith has no position in the stocks mentioned. The Motley Fool holds and recommends Amazon, CoStar Group, Redfin, Tesla, Zillow Group (A shares) and Zillow Group (C shares). The Motley Fool recommends the following options: $13 short calls in August 2022 on Redfin. The Motley Fool has a disclosure policy.