Digital real estate media still taking money off print
Perhaps it's time for would-be media investors to adopt a new strategy and follow the money to new media. Anyone who has done that by investing in REA Group, which owns the realestate.com.au website and similar sites in Europe and Asia, has been handsomely rewarded.
Over the past 10 months the share price has risen from $12.90 to a high of $29.50 and over five years it has delivered shareholders an average gain of 43.7 per cent a year. One of those shareholders reaping rewards has been Rupert Murdoch, with his News group holding a handy 61.6 per cent of its stock. No doubt that has helped defray some of the revenue losses in his print businesses.
But following such a big run-up, is there still potential for further growth for those who are not on the register? This week's analysis by Robert Brain, a director with the Australian Technical Analysts Association, helps answer that question.
Unusually this week we show three charts, the top one being the price chart, the second daily volume and the bottom, daily trades numbers going back to the beginning of December. The line charts on volume and trade represent eight-day moving averages. Rises in volumes and the number of trades in a stock that is going up can indicate there is strong underlying demand and can presage further rises.
At point one on the chart, on January 8, the number of trades and volumes both went above the moving-average lines, indicating investor interest, but on that occasion it did not push the share price up. From point one to point two, volumes dropped off a bit but on some days trade numbers were higher than the moving average, which crept up a little.
At point three, on March 15, volume and trade numbers spiked dramatically but the share price pushed up only a little and has edged up slightly since then. While volumes have dropped a little in recent times, trade numbers have been strong. All this - as well as reference to candlestick charts - Brain says indicates there is underlying buying support and the stock could move higher.
Anyone wanting to go in at these prices would be wise to put in place a stop loss at somewhere between $25 and $26, levels below where recent buying has pushed the stock. Back on the fundamentals, you won't be buying for the dividend, which is 1.3 per cent fully franked, so traders need to be nimble here.
This column is not investment advice. rodmyr@gmail.com
Frequently Asked Questions about this Article…
The article explains that traditional media revenues are migrating to the internet, which has put print and television companies under pressure as advertisers and audiences move to digital platforms.
Investors following where digital ad dollars are going have favoured REA Group because it owns realestate.com.au and similar sites overseas, and its share price has risen strongly as a result.
According to the article, REA Group's share price rose from $12.90 to a high of $29.50 over the past 10 months, and over five years it delivered an average gain of 43.7% per year.
Yes. The article states that Rupert Murdoch’s News group holds 61.6% of REA Group’s stock.
Robert Brain’s analysis used price, daily volume and daily trades with eight‑day moving averages. He noted periods where volume and trade numbers spiked (for example on March 15) and other points where trades rose above moving averages, which together indicate underlying buying support that could presage further gains.
The article suggests that rising volumes and increasing numbers of trades on a rising stock can indicate strong demand. For REA Group, spikes in volume and trades alongside modest price gains were interpreted as evidence of underlying buying support, but investors should combine this with other analysis and risk management.
The article advised that investors wanting to buy at the then‑current prices should consider a stop loss between $25 and $26, which is below where recent buying had supported the stock.
No — the article notes REA Group’s dividend yield was about 1.3% fully franked, so the piece warns you wouldn’t be buying the stock for a meaningful dividend and that traders need to be nimble.
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