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This House Ain't Made of Straw, Like so Many Companies, but Bricks

By Malcolm Stacey | Tuesday 16 May 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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 Trudgers. There’s been talk of a collapse in property prices on this august website. As I’ve often posited, I consider this too dire a view of the bricks and mortar game.

There are two healthy drivers of house building in this country. The first is that demand outstrips supply. The second is that the government has introduced many a scheme to encourage more home building. Such incentives will only increase, whatever government gets in next time.

I don’t think Labour has a chance, but they have committed themselves to building many more new homes. The Tories want more council houses to be put up and will, no doubt, hold out carrots to the industry.

I know a respected company which is already doing well out of the building game, and will only rise higher, if my views are correct (and they may not be). That firm is Ibstock (IBST). It makes bricks. And it also does fancy arches, chimneys etc. Ibstock may sound like a new fangled sort of name, but the company, based in Ibstock, Leicestershire, has been making bricks for nearly 200 years.

Two years ago the company came back to the London Stock Exchange after 19 successful years in private ownership. For P/E watchers among you, the number I have is only 10.79.

Times have not been dandy for builder-related companies over the last few years, but Ibstock has done better than most and remained cash positive over that time. If building is to increase in the UK, it might find things easier now. It also does business in the USA, where you’ll recall Big Donald said he wants more building in his tenure.

Barclays Bank agrees with me that the shares are worth looking at. This is a popular company with a goodly collection of new projects which others in the City seem to like.

And now I’m going to the Punter’s Return.

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