The shares of SEEK Limited (ASX: SEK) are amongst the best performers on the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) in the last 30 days.
During this time they have climbed by almost 14% compared to the S&P/ASX 200 which has climbed by just over 3%.
I'm sure a lot of investors will now wonder if the share price has peaked or whether it can continue to climb. The good news is that I believe it can still continue to climb, and here are five reasons why:
SEEK had a slow start to 2016 – Despite the 14% climb in the last 30 days, its shares have only just broken through into positive territory for the year. The company has a long history of providing strong annual shareholder returns, and things could just be about to get started.
Revenue growth – SEEK grew its revenue by a massive 22% in its latest half-year results. I expect it will maintain this level of growth for the full year, allowing it to produce another year of record-breaking top line results. This would be an impressive eight consecutive years of year-over-year revenue growth.
Earnings growth – Just like the top line, SEEK's bottom line has been growing at a high rate. For the first half of the current fiscal year it reported that underlying net profit after tax grew by 9% to $102.4 million. This is perhaps all the more impressive considering the subdued macroeconomic conditions the company was subjected to.
Good value – Although some may consider 28 times earnings to be a little on the expensive side. This does price them in a similar range to fellow growth shares Carsales.Com Ltd (ASX: CAR) and REA Group Limited (ASX: REA) which are trading at 28 and 32 times earnings, respectively. In my opinion, this means that now is a great time to pick up some shares.
Future growth prospects – Thanks to its overseas investments I think the company will be able to grow its earnings at a high rate for many years. If SEEK can produce even a fraction of its domestic success in the Chinese market with Zhaopin, I believe it has the potential to more than double the size of the company. It will come as no surprise that according to Commsec, analysts expect earnings per share to grow from 50.5 cents this year, all the way to 68.8 cents per share in 2018.
Foolish takeaway
It is for these reasons that I believe SEEK Limited has every chance of providing shareholders with another year of market-beating returns. The growth that lies ahead makes it an incredibly attractive investment.
