Forget Lloyds shares! I’m looking at an even better FTSE 100 bargain
2025’s been a spectacular year for many FTSE 100 stocks, including Lloyds. The British banking giant has surged more than 75% since January, and is on the verge of surpassing the long-anticipated £1 share price threshold for the first time since 2008.
However, with interest rates starting to fall, and future growth already seemingly baked into its valuation, 2026 may prove to be far less impressive. Even more so, considering the other FTSE 100 bargains that remain on offer. And one cheap growth stock I’ve got my eye on right now is Rightmove (LSE:RMV).
Higher growth, lower share price
Even though activity within the British housing market remains subdued due to higher interest rates, estate agents have continued to spend on Rightmove’s online property portal platform.
Rapid adoption of new premium marketing packages, along with price hikes, has driven up revenue by double digits, with earnings per share growing even faster. And yet Rightmove shares have tumbled almost 20%, dragging its price-to-earnings ratio to just 20 â almost 50% lower than its long-term historical average of 29.8.
What happened?
Capex on the rise
A big source of concern is management’s plans to invest up to £60m in upgrading its platform with new AI-powered features. Beyond adding some basic generative functions to help agents list properties faster and more effectively, the goal is also to introduce a unique suite of visualisation tools.
Buyers will be able to preview extensions and renovations, estimate costs, and even calculate potential returns on investments for landlords and house flippers.
On the surface, this all sounds rather promising. And apart from expanding its technological competitive moat, management projects that by 2030, revenue will continue growing by a minimum of 10% a year, with earnings per share expanding by at least 15%!
But it comes at a cost. In the short term, Rightmove expects underlying operating profit growth to slow to as low as 3% next year. In other words, it’s sacrificing short-term performance for long-term gain. The only trouble is that long-term gain isn’t guaranteed.
Are investors being short-sighted?
Investors rarely like seeing guidance being cut, so seeing Rightmove shares take a tumble is understandable. However, thinking and investing long-term is how Rightmove became an industry titan. And the playbook hasn’t changed.
Providing the AI investments deliver on their promises, the company will have reinforced what made it so successful in the first place: a superior platform that provides the best user experience. That’s why even with numerous rival alternatives emerging over the last decade, Rightmove still controls over 70% market share.
There are obviously no guarantees. But given the group’s tremendous track record and steep sell-off in shares despite the long-term trajectory, it’s hard not to wonder if a buying opportunity has emerged. That’s why I’m carefully considering this FTSE 100 for my own portfolio. And it’s not the only potential bargain I’ve got my eye on right now.
The post Forget Lloyds shares! I’m looking at an even better FTSE 100 bargain appeared first on The Motley Fool UK.
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Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group Plc and Rightmove Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
