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By Malcolm Stacey | Wednesday 25 March 2015
Disclosure: I own shares in one or more of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Hello Share Fans. I hate the expression 'no-brainer', so I won't use it in the context of buying shares in Barratt Developments (BDEV).
But, as I've said quite a few times in the last 12 months, there are clear expectations that house building in Britain is on the verge of a boom.
This is becoming ever more likely now that the government has announced yet another scheme to help first-time buyers. This time, they will enable a 20% discount on starter homes. That is no mean offer. The Tories have promised to help in the building of 200,000 new homes by 2017.
Also, there are some comparatively cheap prices for swathes of building land at the moment, one of the biggest costs, of course, in the construction world.
The population of Britain is growing at a rate some would say is alarming. That does not dismay me, but the current rate of home-building does. It is very slow – much slower in fact than at any time since the Second World War.
The government is going to get on top of the problem eventually – they will have to.
There is one brake on house builder shares, however and that is the uncertainty caused by the nearness of the general election. What happens to all these house buying plans – including the right to buy housing association homes – if the Tories don't get in?
But whoever wins the election, they will have to take housing encouragement a bit more seriously – and it is not a partisan problem.
So I would be inclined to invest in almost any house builder at the moment. I do support a medium -sized firm called Galliford Try (GFRD). But Barratt Developments shares have done particularly well in the last year. And now the climate is even more favourable, I expect a lot better to come. The price to earnings ratio by the way is s respectable 17.
There are lots of respectable figures in the Punter's Return today.
Malcolm Stacey has been writing about shares for more than 20 years. His first book "The Armchair Tycoon" was first published in 1998 but a revised 2014 e-version is now available. To obtain a FREE copy fill in the form HERE
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