Why I think the Seek Limited share price could head higher in 2017

The Seek Limited (ASX:SEK) share price could go higher.

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The Seek Limited (ASX: SEK) share price is up 7.5% in the last month and I think it could keep growing in 2017.

Seek has a market capitalisation of $6.5 billion and is the owner of Australia's largest jobs portal website Seek.com.au. It has a number of attractive factors about its business that I think makes it worth a closer look.

Here are three great reasons why you should consider Seek for a place in your portfolio:

Self-fulfilling success

Seek has worked hard to cement its position as Australia's leading jobs portal, which is a great position to be in.

However, there's more than just a title at stake by being number one. It means that potential employers have the largest pool of applicants to appeal to.

Applicants know that there's the most amount of jobs on Seek, so applicants will go to Seek before any other site.

This positive cycle between employers and employees should see Seek stay at number one for a long time to come.

International operations

Seek is strong in Australia and the market leader in 14 other countries.

Seek has a 61.5% stake of the Chinese site Zhaopin, which grew revenue by 19% in FY16. China is a huge opportunity for Seek with its big population.

Seek Asia operates in several South East Asian countries, it grew revenue by 28% in FY16. South East Asia has a big population too, so there's a large opportunity as more jobs are attained through job portals.

Strong results

In FY16 Seek reported total revenue was up 11%, earnings before interest, tax, depreciation and amortisation grew by 5%, underlying net profit after tax (excluding Seek Learning) grew by 14% and reported net profit after tax grew by 27%.

Given that Australia's jobs market is currently fairly sluggish, the above growth figures are impressive. When a company can grow in poor conditions, that's a good sign of a company's strength.

Risks

If Australia's economy went into recession then that would cause problems for Seek. There would still be some jobs advertised but there would be a reduction in job adverts to result in lower revenue and profit.

Another risk is that some large competitors are expanding in Australia such as LinkedIn and Indeed. If they keep expanding it is likely to take some of Seek's potential revenue.

Time to buy?

Seek's share price is almost $16, so it's not as cheap as it was earlier in February when it was below $15. It's trading at 25.5x FY17's estimated earnings with a grossed-up dividend yield of 3.62% which I think will make a good long-term buy for Foolish investors.

If you're not sure about Seek perhaps this stock with a bigger dividend yield and just as exciting growth opportunities would be a better choice for your portfolio.

Motley Fool contributor Tristan Harrison has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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