3 reasons you’re on a winner with SEEK Ltd

This is quite possibly one of the greatest businesses listed on the ASX.

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Most investors and job seekers these days are familiar with SEEK Ltd (ASX: SEK) thanks to its significant market share of online employment classifieds. What they may not be as aware of is that SEEK is also the world’s largest online employment marketplace by revenue, profits and market capitalisation!

In fact SEEK’s revenue for international online employment classifieds advertising is now on par with its domestic service. The growth of SEEK is a credit to management’s foresight and shareholders have certainly been benefiting. In the past 12 months alone, while the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) has gained a respectable 10.6%, SEEK’s share price has surged 62.3%.

Here are three reasons why SEEK will continue to be a top stock:

1)      Market leader by a country mile

Talk about having a lead! Out of the three online jobs boards in Australia SEEK boats a 70% share of ads. The structural change which has occurred and revenue lost at newspaper firms Fairfax Media Limited (ASX: FXJ) and News Corp (ASX: NWS) doesn’t look to be over either. With around $200 million in job ad spend still with newspapers there is potentially still more revenue to flow SEEK’s way.

2)      Global expansion ambitions

It’s not just domestic dominance either. SEEK has expanded through acquisition into a number of regions around the world including Mexico, South East Asia, Brasil and Africa. In most cases it owns the clear number one jobs board in each market.

Navitas Limited (ASX: NVT) has proven that there is serious money to be made in Education. SEEK hasn’t let this go unnoticed and is positioning itself for a slice of the education market including through partnerships with Deakin University and Swinburne University where it delivers online tertiary courses specifically for working Australians.

3)      Dividends

One of the most appealing aspects to SEEK’s business model is the free cash flows pouring out of the company. Last year the board declared a fully franked dividend of 22 cents per share – a rise of 27% on the prior year. The strong financial position and future growth should mean dividends continue to rise at a double digit rate.

Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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