What next for Rightmove's LON:RMV High Flying share price?

What next for Rightmove's LON:RMV High Flying share price?

Article image

There's an exclusive group of shares in the stock market that most investors would love to own. They've got stellar track records, sparkling reputations and the ability to deliver stunning returns over long periods - and Rightmove (LON:RMV) is one of them.

What makes stocks like Rightmove so appealing is their strong exposure to the proven return drivers of high quality and momentum. It makes them capable of compounding market-beating returns over many years. The catch is that they often come with expensive valuations - which means you have to pay up for the privilege of owning them.

5ca360fdeca32High_Flyer.png

You can think of these shares as being the stock market's High Flyers. So what are the common features of stocks like Rightmove and where can you find more companies that have them?

High Flyers are high quality...

To start with, High Flyers are very distinctive. They are good quality, both in terms of their franchise and financial strength. This tends to show up in high profitability and strong industry leading margins. They’re stable, growing and often have accelerating sales and earnings. They also have strong and improving financial histories and no signs of accountancy or bankruptcy risk.

Rightmove (Rightmove) is a large cap stock in the Internet Services industry. One of its stand out quality metrics is its 5-year Return on Capital Employed, which is a truly remarkable 2,078%.

...and they have powerful momentum...

In addition, High Flyers have strong momentum both in the price of their shares but also in their track records of earnings growth. It shows up in stocks trading close to their 52 week high prices and outperforming the market. They’ll often be beating broker estimates and getting forecast upgrades and recommendation changes.

This is also true at Rightmove, where the share price has risen by 101.8% over the past five years. That said, the performance has been much more muted over the past year and Rightmove's 1-year relative price strength is a more modest 3.83%. Could this be a sign that the market is overlooking it?

... but they can be expensive

The drawback with high quality, strong momentum shares is that the market loves these traits. So stocks like Rightmove rarely look cheap, and that can put many investors off them. Only with hindsight could you say they were a bargain.

Stockopedia's ValueRank scores stocks using a blend of the most important value ratios - from 0 (expensive) to 100 (cheap). On this basis, Rightmove has a ValueRank of 10 - putting it squarely in the most expensive third of the market, even though its share price has been fairly flat over the past year.

Next Steps

The appeal of the High Flyer approach is that it targets the best quality, strongest momentum shares in the market.

One word of warning is that High Flyers aren’t immune from problems. When sentiment changes, the momentum in these shares can crash. So they need to be watched carefully.

But on the flip-side, the combination of two factors in quality and momentum can zero-in on the type of company that’s capable of compounding investment returns over many, many years. If you can catch them at slightly less expensive valuations - perhaps when the market is distracted - then all the better.


Find the rockstars of the stock market

High Flyers are great stocks to have in your portfolio if you think you need more momentum or quality - just look out for signs that momentum might be changing. If you want to see which other stocks qualify as High Flyers, you can find a comprehensive list on Stockopedia's StockRanks page.

Simple tools can help us better measure and understand the risks we take. That's why the Stockopedia team has been busy building new ways of understanding investment risks and company characteristics. In this webinar, we talk about two or our most popular innovations: StockRank Styles and RiskRatings. These indicators transform a ton of vital financial information into intuitive classifications, allowing you to get an instant feel for any company on any market - sign up for a free trial to see how your stocks stack up.


About us

Stockopedia helps individual investors make confident, profitable choices in the stock market. Our StockRank and factor investing toolbox unlocks institutional-quality insights into thousands of global stocks. Voted “Best Investment Research Tools” and “Best Research Service” at the 2021 UK Investor Magazine awards.

Rightmove's StockRank™

Falling StarBalanced

Rightmove's StockRank™

With a StockRank of 48, Rightmove is in the bottom 47% of the 7,584 stocks we cover in Europe, according to our proprietary ranking system.

See the full StockReport

Absolutely Perfect

"Trialed multiple other platforms - this is by far my favourite. Other platforms do not even have half the stuff that you can find on Stockopedia. Love it!"

As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.