If a straw poll was taken of the titles used for watch lists, I'd bet the title 'Wish List' was a common choice.
It's a sensible title and here's why. Long-term investors should look to effectively collect a portfolio of great businesses when the market offers them at attractive prices over their investment lifetime.
So what businesses should be on your wish list?
One group that has obvious appeal are the listed classifieds businesses such as SEEK Limited (ASX: SEK) and REA Group Limited (ASX: REA), which not only have market-leading status in employment and real estate classifieds respectively, but also boast solid balance sheets, attractive margins, exciting offshore growth plans and competitive advantages.
While SEEK and REA perhaps attract more investor attention in part due to their larger market capitalisations of $4.9 billion and $5.4 billion respectively, there is another leading online classifieds business which should arguably be on your 'Wish List'…
Carsales.Com Ltd (ASX: CAR), with a market capitalisation of $2.5 billion, is the dominant provider of new and used car classifieds in Australia and also has investments in overseas businesses which provide shareholders with exposure to the fast growing regions of Latin America and Asia.
Interestingly, over the past two years, while SEEK and REA have soared 111% and 128% respectively, Carsales.Com has only gained 35% – that's still better than the 22% increase in the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) but far less than its peers.
With the stock currently trading at around $10.40 and with consensus forecasts (provided by Morningstar) suggesting earnings per share growth of 6.3% and 15.7% in financial years (FY) 2015 and 2016 respectively, the stock is on a FY 2016 price-to-earnings (PE) ratio of 21.1x.
In comparison, SEEK is trading on a FY2016 forecast PE ratio of 22.6x, while REA is trading on 22.8x which may suggest Carsales.Com is attractively priced compared with its peers.
