The hidden value in Carsales

James Carlisle explains why the country’s leading car sales portal deserves a spot on our Buy list despite more than doubling in price.

When we first looked at Australia’s most popular portal for buying and selling cars (and boats and bikes) in the float of September 2009 (see Carsales.com’s luxurious price tag (No View – $3.50)) it was priced on a prospective price-earnings ratio of 22.

By the time of Carsales cleans up the yard (No View – $4.86) on 24 Oct 2011, that multiple was 20. Now it’s back up to 26 and the share price has risen 163% since listing. Isn’t this party already over?

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