Is Seek a buy?

Strong growth opportunities leads investors to SEEK.

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Australia's leading online employment website operator, Seek (ASX: SEK), is poised for growth in coming years if its overseas investments take off and the Australian economy strengthens. Seek maintains three revenue sources: Australian domestic employment advertising through seek.com.au, education services, and investments in market leading international job websites.

There is little room for growth for Seek in Australia as  it currently captures over 80% of all Australian online job search time, dominating competitors CareerOne (owned by News Corporation (ASX: NWS)) and MyCareer (owned by Fairfax (ASX: FXJ)). There is potential downside for Seek in Australia if the economy stagnates, unemployment increases, and job advertisement volume decreases. To offset any loss of advertisement revenue, Seek connects job seekers with education providers (for a fee), a business may benefit from more Australians searching for work in a high-unemployment environment.

The main driver of growth in the coming years will be from the company's exposure to the growing Latin American and Asian markets. These markets, unlike Australia, have low internet penetration and online advertising has huge room to grow. SEEK has exposure to China, Brazil, Indonesia, Mexico, Malaysia, Singapore, Thailand, Hong Kong and the Philippines through investments in online job marketplaces. This gives the company exposure to many of the world's largest and fastest growing populations, as well as those with strongly growing economies which will hopefully lead to strong employment advertising.

The main threat to Seek is expected to come from the US-based LinkedIn (NYSE: LNKD). LinkedIn is a work orientated social networking site which operates an integrated job search business called Talent Solutions. Talent Solutions sends LinkedIn users alerts of recently posted jobs in their field of expertise and desired location, however the company has noted that most users do not currently interact with the site as their primary method of job seeking.

LinkedIn has seen exponential growth in users, up 100 million in the past year and a half, but has thus far had little impact on Seek's Australian market share. Depending on the strategy of the company, a dedicated marketing blitz targeting Australian job seekers may see some Seek market share lost in the near team, however this is considered unlikely by most brokers who are forecasting strong earnings growth.

Foolish takeaway

Seek has been a strong performer for a number of years and the company is taking smart steps to diversify its earnings streams in the wake of a weakening Australian economy. If the company's investments in Asian and Latin America succeed it will see the company generate quickly growing profits. Any pullback in the company's share price may represent a buying opportunity for investors searching for growth.

Interested in our #1 dividend-paying stock? Discover The Motley Fool's favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of "The Motley Fool's Top Dividend Stock for 2013-2014."

More reading


Motley Fool contributor Andrew Mudie does not own shares of any companies mentioned in this article.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »