Is the SEEK (ASX:SEK) share price in the buy zone for blue chip investors?

Could the SEEK share price be heading higher?

| More on:
Woman using laptop for job search

Image source: Getty Images

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

Earlier today I looked at a couple of small cap shares that have been tipped as buys. You can read about those here.

But if small caps are too high up on the risk scale for your investment tastes, then you might want to take a look at the blue chip share listed below. This is because blue chip shares generally carry much less risk than small caps and are therefore arguably more suitable to the conservative investor.

Which blue chip?

The blue chip in question on this occasion is SEEK Limited (ASX: SEK).

It is of course the leading job listings company in the ANZ region with its seek.com website. In addition to this, the company has a number of similar businesses around the world and an investments business.

SEEK has been performing very positively in FY 2021 thanks to Australia's impressive economic recovery from the pandemic. This led to the company recently upgrading its full year guidance for FY 2021.

Pleasingly, with Australia's unemployment rate tipped to continue reducing over the coming years, job advertisement volumes are expected to rise. Combined with the removal of discounts, price increases, and further depth product penetration, this bodes well for its growth prospects.

Particularly given its incredibly strong market position. For example, at the end of December, SEEK ANZ had 16 million candidate profiles, 35 million monthly visits, and 160,000 active hirers. This led to the company having five times more placements than its nearest competitor.

Recent broker upgrade

One broker that is a big fan of SEEK is Macquarie. Earlier this month, the broker upgraded the company's shares to an outperform rating with an improved price target of $40.00. This compares to the latest SEEK share price of $32.61.

It believes the company is well-placed to benefit from ad volume growth and a tight labour market.

Macquarie expects the Australian unemployment rate to fall from 5.5% to ~4% during 2023, underpinning a 25% increase in job ad volumes in FY 2022.

Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended SEEK Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Blue Chip Shares

A young man punches the air in delight as he reacts to great news on his mobile phone.
Blue Chip Shares

The best blue chip ASX 200 shares to buy this month

Let's see which blue chips are best buys according to analysts at Bell Potter.

Read more »

Blue chips with stock written on them.
Blue Chip Shares

Why these ASX blue-chip shares are top buys for this fund manager

Here are two of the most appealing ASX blue-chip shares.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Blue Chip Shares

3 high-conviction ASX 200 shares I'd buy in June

Let's see why these strong stocks could be top picks for investors this month.

Read more »

A woman presenting company news to investors looks back at the camera and smiles.
Blue Chip Shares

Morgans says these ASX 200 blue chip shares are buys

Let's see which blue chips the broker is recommending to clients.

Read more »

Ecstatic woman looking at her phone outside with her fist pumped.
Blue Chip Shares

3 super strong ASX 200 blue chip shares to buy now

These blue chips have been given a big thumbs up by brokers.

Read more »

Broker looking at the share price on her laptop with green and red points in the background.
Blue Chip Shares

Buy these fantastic ASX shares for your SMSF

Looking to bolster your self-managed super fund? Then check out these buy-rated shares.

Read more »

A woman standing in a blue shirt smiles as she uses her mobile phone.
Blue Chip Shares

2 ASX blue-chip shares that I think are excellent long-term buys

I think these blue-chip shares are impressive players.

Read more »

A group of people in suits watch as a man puts his hand up to take the opportunity.
Blue Chip Shares

These top blue chip ASX 200 shares could rise 25% to 75%

Brokers are tipping these shares to deliver big returns over the next 12 months.

Read more »