Marcus & Millichap (NYSE:MMI) is a leading commercial real estate sales brokerage firm. Its stock has declined in anticipation of slower sales and earnings growth as the commercial real estate recovery slowly matures.
But we believe the company can outpace its industry's growth over the long term with its primary focus on less cyclical, private sales (deals from $1 million to $10 million), growth in new agents and improving productivity of existing brokers, and market share gains as it expands into underserved locales and specialty properties (such as industrial, office, and hospitality) beyond its core multifamily and retail focus.
Marcus & Millichap's local market presence and knowledge, national footprint, and database of proprietary listings create both a positive network effect and a competitive advantage. If the commercial real estate market experiences a more severe correction, the company should weather the storm because of its highly variable cost structure and rock solid, debt-free balance sheet, which features more than $5 per share in cash.
From Lauren Romeo's Today's Opportunities in Quality Small-Caps.
