3 FTSE Housebuilding Stocks in Focus After JP Morgan Says Sector Has Solid Foundations

  • March 29, 2021 06:26 PM BST
  • Suhita Poddar
    Suhita Poddar
    Author Suhita Poddar
    140 Posts

    Suhita is a financial journalist at Kalkine Media. She writes on various topics with a specific interest in the renewable energy sector, sustainability and climate finance. She is a former research analyst with over 9 years of experience in the finan...

3 FTSE Housebuilding Stocks in Focus After JP Morgan Says Sector Has Solid Foundations

Source: ungvar, Shutterstock

Summary

  • Brokerage firm JP Morgan said that the UK’s housebuilding market had solid foundations due to the sector receiving ongoing support by the government.
  • The research report held a positive long-term outlook for the sector due to the earnings momentum.
  • The report commented on the upside potential of several stocks, including Taylor Wimpey Plc, Persimmon PLC and others

Investment banking giant and brokerage firm JP Morgan in its research report has highlighted that the UK’s housebuilding market had solid foundations as the sector is receiving strong support from the government. A report in Thomson Reuters stated that the housebuilding sector outperformed the market on a year-to-date basis.

The report also added that the sector could outperform further owing to the sector’s near-term visibility and demand trends. Moreover, the report had a positive long-term view of the sector due to its earnings momentum for the short term.

The brokerage upgraded housebuilding stock Taylor Wimpey Plc (LON: TW.) from neutral to overweight due to its earnings momentum. It also changed the rating for Barratt Developments (LON: BDEV) from overweight to neutral as the report noted it had limited upside potential due to good performance. It also stated Vistry Group had limited ratings change potential.

It also commented on the upside potential of housebuilding stocks such as Persimmon PLC (LON: PSN) due to efficient management and strong balance sheet and based on strong performance or cost management or other factors, according to Thomson Reuters.

Also Read: 5 Housebuilder Stocks to Keep an Eye on In March

Let us take a closer look at 3 of these high performing FTSE-listed housebuilding stocks in the sector with a YTD return of over 7 per cent:

  1. Taylor Wimpey (LON: TW.)

FTSE 100-listed housebuilding and construction company Taylor Wimpey is one the biggest in the UK. The company started pre-construction activity for 250 homes for its West Craigs development project in Edinburgh on 29 March.

According to Thomson Reuters, JP Morgan upgraded its stock rating due to its likelihood to outperform the market owing to its earnings momentum.

(Source: Refinitiv, Thomson Reuters)

The group’s market cap stood at £6.565 billion while its year-to-date returns stood at 10.52 per cent. The company’s shares were trading at GBX 183.35, up by 1.81 per cent, while the FTSE 100 stood at 6,716.44, down by 0.36 per cent on 29 March at 13:37 HRS GMT+1.

Also Read: Persimmon Declares Second Dividend, Taylor Wimpey Raises Profit Guidance - Is the Housing Market Growth Sustainable?

  1. Persimmon PLC (LON: PSN)

UK-based homebuilding major Persimmon PLC is an FTSE 100 constituent and is headquartered in York, England.  The above-mentioned JP Morgan report considered this stock as one of their top picks calling it a core pick and top idea.

(Source: Refinitiv, Thomson Reuters)The company’s market cap stood at £9.639 billion while its year-to-date returns stood at 7.05 per cent. The company’s shares were trading at GBX 2,962.00, down by 1.95 per cent at 13:50 HRS GMT+1 on 29 March.

 

Also Read: Persimmon plc (LON: PSN) releases robust performance with strong housing demand

 

  1. Bellway PLC (LON: BWY)

UK-based Bellway PLC is a residential property development company and is a constituent of the FTSE 250 index. The company reported on 26 March, its sales rose by 6.3 per cent touching a record high of 5,656 homes in H1 2020, from 5,321 in the year before.

The company believes sales will bounce back to pre-covid levels by completing about 10,000 home sales, compared to the 7,522 homes sold by 31 July 2020. It also reported that its housing revenue grew by 12.5 per cent to £1.7149 billion during 1H 2020.

(Source: Refinitiv, Thomson Reuters)

The company’s market cap stood at £4.271 billion while its year-to-date returns stood at 16.01 per cent. The company’s shares were trading at GBX 3,429.00, down by 0.98 per cent at 14:02 HRS GMT+1 on 29 March. Comparatively, the broader index FTSE 250 stood at 21,490.85, up by 0.02 per cent for the same period.

 


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