Online property listing site Zoopla (LSE: ZPLA) may have grown revenue by a full 34% in 2015, but underneath this dramatic top-line growth there's a major problem lurking. Without the £160m acquisition of comparison site uSwitch, revenue from the group's core business actually fell from £80.2m to £79.9m last year. This is the last thing investors want to see in a growth share valued at a pricey 25 times forward earnings.
The reason for this fall was the creation of OnTheMarket.com by a consortium of estate agents tired of paying Zoopla and industry leader RightMove. OnTheMarket customers are only allowed to list their property on one other site, the majority of whom chose RightMove. In 2015 the number of agents who work with Zoopla fell 17% and the number of listings dropped 24%
The uSwitch acquisition may work out in the long term as it's a market leader with decent profitability. However, Zoopla is stuck in second place behind RightMove in its core business, which is enough to make me wary of counting on Zoopla to fund my retirement.
Too many questions
Prospective Yorkshire miner Sirius Minerals (LSE: SXX) has many locals in the area invested in the project for their retirements. The company has built up a large base of small shareholders for its project to mine and export Polyhalite, a fertilizer, from underneath North York Moors National Park by means of a 23-mile-long, 4-metre-wide tunnel.
According to its latest feasibility study, this project would need $3.6bn to reach its first phase target production levels after 2021. With only £25m cash on hand, this will entail significant debt placements and share issuances to begin production. And although the company has lined up buyers for about 35% of its first year's production, there's not currently a large, liquid market for Polyhalite, which worries me. At the end of the day, a controversial business plan, high debt and share dilution ahead before production even begins is enough to leave me looking elsewhere for my retirement investments.
Maker of upmarket tonic and other drinks mixers Fevertree (LSE: FEVR) is hoping that wealthy retirees and millennials alike will continue flocking to premium tipples when they head down to the pub. And so far, this has worked out very well for the company. Fevertree's revenues rose 71% in 2015 and profits increased a full 82% on the back of enviable 52.1% gross margins.
Fevertree's margins are high due to both their premium pricing point and the company's outsourced business model. All manufacturing and distribution is left up to local partners, which relieves Fevertree of the need for expensive capital investments. The number of local partners is growing quickly too as non-UK sales now account for 65% of revenue.
The bad news for investors on the outside looking in is that after appreciating 113% over the past year, the shares now trade at a very pricey 42 times forward earnings. If investors buying today are banking on Fevertree paying for their beach bungalow in retirement, they'll need to do their part and continue paying for upmarket gin & tonic.
Ian Pierce has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.