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HUB and Rea Group Ltd: 2 ASX shares to dig into

The Hub24 Ltd (ASX:HUB) share price has jumped 65.9% since the start of 2024. It's probably worth asking, 'is the HUB share price cheap?'
The Hub24 Ltd (ASX:HUB) share price has jumped 65.9% since the start of 2024. The Rea Group Ltd (ASX:REA) share price is tracking 51.1% off its 52-week lows.

HUB share price in focus

HUB24 was founded in 2007 and has quickly become a leading player in the wealth management industry, providing software and management platforms that touch financial advice, superannuation, and investment management.

HUB24’s three main products are the platforms HUB24, Class, and myprosperity. HUB24 is made for financial advisers and their clients, providing access to a range of managed funds and investment products. Class is a leading software for self-managed super funds to manage portfolios, legal documentation, and compliance. myprosperity is a provider of client portals for accountants and advisers to provide an enhanced service and customer experience.

HUB24’s competitive advantage is in the quality of its service. In 2024 they’ve been awarded Overall Best Platform in the Adviser Ratings Financial Advice Landscape Report, and ranked first for Overall Satisfaction and Brand Image and Reputation in the 2024 Wealth Insights Platform Service Level Report.

REA shares

Founded in 1995, REA Group is a Melbourne-based real estate advertising company that is majority-owned by News Corp. In Australia, it’s best known for its Realestate.com.au platform.

REA Group operates on a global scale and now operates property websites in around 10 countries used by some 20,000 agents. In a typical month, the core Australian website gets over 55 million visits. While the business has diversified globally, Australian operations still account for the lion’s share of revenue. Within Australia, REA makes money by listing properties for sale or rent (i.e. the agent uses REA’s website to show properties, which the property owner is on the hook to pay). It also makes money from financial services (e.g. mortgage broking), but this is a much smaller part of the business.

HUB share price valuation

As a growth company, one way to put a rough guesstimate on the HUB share price could be to compare its price-to-sales multiple over time. Currently, Hub24 Ltd shares have a price-sales ratio of 14.74x, compared to its 5-year average of 13.32x, meaning its shares are trading higher than their historical average. This could mean that the share price has increased, or that sales have declined, or both. In the case of HUB, revenue has been growing over the last 3 years. Please keep in mind that context is important – and this is just one valuation technique. Investment decisions can’t just be based on one metric.

The REA share price currently trades at a price-sales ratio of 16.73x, which compares to its 5-year long-term average of 17.41x. So, REA shares are trading below their historical average. However, a simple multiple like this should only be the start of your research. The Rask websites offer free online investing courses, created by analysts explaining things like Discounted Cash Flow (DCF) and Dividend Discount Models (DDM). They even include free valuation spreadsheets! Just remember there are many different ways to value a share, like Rea Group Ltd.

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Owen Rask’s investing report available

With bond ETFs like ASX:IAF and the S&P 500 riding high, now could be one of the best times to start earning passive income from a portfolio of shares and ETFs.

In this free analyst report, our Chief Investment Officer, Owen Rask, names 10 ASX stocks and ETFs to watch.

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