When it comes to high-growth real estate stocks, few can compare or compete with Star Group (CSGP 0.00%). This digital real estate data provider has a hand 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 many others.
Over the last decade, the stock has soared 777%, providing an annualized return of approximately 24%, nearly double that of the stock. S&P 500. Its latest earnings, which were released on July 26, 2022, showed promising results for the company. exceeding analysts’ expectationscausing its share price to jump 19% over the last week.
If you are looking for something valuable growth stocks continues to deliver strong results in a challenging market, here’s why you should consider CoStar Group.
Growth opportunities are abundant
One of the main reasons CoStar has seen such tremendous results over the last decade is the acquisition of established online platforms. Since 2020, CoStar has spent $600 million acquiring Ten-X, Homesnap, Homes.com and Emporis, helping it break into the international, distressed and residential 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 that it does not come close to satisfying its target market and has used aggressive marketing efforts to expand the users and revenue of these sites.
It also just launched CitySnap, a New York City-focused listing platform that is expected to bring new business to the company. It also has $4 billion in cash on hand to help with its expansion efforts. Even after deducting his roughly $1 billion in outstanding debt, he still has $3 billion to use for shopping in the years to come.
Performance remains solid
In Costar’s fiscal fourth quarter of 2022, its results were positive, with net bookings on its websites increasing 66% year over year. The company ultimately increased its revenue by 12%. You’ve also increased your earnings before interest, taxes, depreciation, and amortization (EBITDA) by 25% and its earnings per share (EPS) by 40% in the last year.
Quarter after quarter, the company is breaking records for sales activity with Apartments.com and Loopnet.com, with its data services through CoStar Group leading the way. While there is growing concern about the impact of a real estate slowdown and recession, investors should remember that CoStar Group was able to set new sales records at a very turbulent time in the real estate market in recent years.
Commercial real estate, the industry to which CoStar has the most exposure, was in difficult territory 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 industry, a drop in traffic to its sites due to a recession or a decline in buying interest would definitely hamper growth, but not stop the company entirely. Plus, it has more than enough cash to float its operations and continue to expand.
Unlike most other tech stocks, CoStar Group hasn’t been hit hard in the technological accident. It is down just 17% over the past year, while many other real estate tech stocks, such as Zillow Y red fin, are down 64% or more. Today, its price-earnings ratio (P/E ratio) is 86, which is high but below many other growth tech stocks like Tesla, Amazonor Zillow.
CoStar Group is likely to continue expanding its business by using its liquidity to fuel new acquisitions and pump money into existing platforms. If you are looking for a stock to continue your positive momentum for market volatilityCoStar Group is a clear buy.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Liz Brumer-Smith has no position in any of the mentioned stocks. The Motley Fool holds positions and recommends Amazon, CoStar Group, Redfin, Tesla, Zillow Group (A shares), and Zillow Group (C shares). The Motley Fool recommends the following options: $13 August 2022 Short Calls at Redfin. The Motley Fool has a disclosure policy.