I wonder how many estate agency businesses dare to carry on their trade without listing the properties they are selling on marketplace sites such as Rightmove and Zoopla.
In today's fast and furious world of instant gratification enabled by computers and mobile devices, if it isn't on the likes of Rightmove, many won't see it.
A grip on the market
Auto Trader Group(LSE: AUTO) is doing something similar to the vehicle sales market. The firm's website asserts that it provides the UK and Ireland's largest digital automotive marketplace, and more than 80% of UK automotive retailers advertise on autotrader.co.uk.
To capture the market like that is an impressive feat, and I reckon the firm's grip on buyers and sellers will be tough to loosen. To compete against it, others would need to invest vast sums of money and then win over market participants, many of whom, I reckon, will be reluctant to switch for fear of missing out. I think Auto Trader's position and strength in the market has strong defensive qualities built on significant barriers to entry for would-be competition - it has a 'moat', to use investing parlance.
One to tuck away
The firm is trading well and City analysts have pencilled-in growth, expecting earnings to elevate 13% for the year to March 2018 and 14% the year after that. Meanwhile, at today's share price around 410p, Auto Trader's forward price-to-earnings (P/E) ratio runs at just over 23 for the year to March 2010. That's a growth rating for sure, but I think its strong position in the market makes the firm interesting as a potential long-term hold.
Often, a higher P/E rating can remain high and act as an indicator of quality as a company's business grows, so share prices can rise along with earnings even though the valuation continues to look on the high side at first glance. I'd rather take my chances with a company posting strong rises in earnings than one selling cheap because it isn't.
Organic and acquisitive growth
Sportswear and outdoor brands retailer JD Sports Fashion(LSE: JD) presents investors with an interesting acquisitive and organic growth story. The November 2016 purchase of the Go Outdoors chain dovetails well with the company's Blacks and Millets brands and bolsters the outdoor activities side of the firm's operations.
Yet the directors consider the sports fashion arm to be the core of the business, and I reckon that's because it delivered more than 99% of operating profit in the year to January 2017. The outdoor arm was responsible for around 8.5% of the firm's revenue, so it looks like there's work to be done in that area to improve profitability.
Sports Direct is expanding fast. Last year, around 70% of revenue originated in the UK, but the overseas expansion programme is gathering pace with 27% of revenue coming from Europe and 3% from the rest of the world.
City analysts following the firm have pencilled-in 14% earnings growth for the year to January 2018 and 10% for the year following. At today's 445p share price, JD Sports Fashion trades on a forward P/E ratio of just over 20 for the current trading year. That's not cheap, but the firm's business isn't junk either. I reckon there's more to come from this successful British retail story.
A further opportunity
I think these two FTSE 250 growth performers look set to do well over the long term along with a company identified as A Top Growth Share From The Motley Fool. If things go well for the firm covered in this report, international expansion could drive the share price higher - perhaps a lot higher - over the next few years.
Kevin Godbold has no position in any shares mentioned. The Motley Fool UK has recommended Auto Trader. 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.