Rightmove (RMV) & Grainger (GRI): 2 real estate stocks to buy

Highlights

• The UK may consider overhauling UK homes’ energy ratings amid concerns that real estate values could see a drop following the installation of heat pumps.
• Under the current rating system, replacing gas boilers with heat pumps would see the property’s energy efficiency ratings get cut.

The government is reportedly considering overhauling UK homes’ energy ratings amid concerns that real estate values could see a drop following the installation of heat pumps under the current rating system, according to media reports.

The reports follow a recent Daily Telegraph report which said that members of the Cabinet ministers feared that households may get impacted by the pace of the UK’s net-zero plans, as they are already facing a cost-of-living pressure.

UK property energy efficiency ratings, known as the Energy Performance Certificates (EPC), give a property its efficiency grade ranging between A to G. These ratings are increasingly linked to their real estate prices. Changing out gas boilers in a home with heat pumps is expected to cut that property’s energy efficiency ratings.

In the UK, property landlords need to have a minimum rating under the proposed rules. Moreover, UK mortgage providers also sometimes consider a homes’ energy certificates while making lending decisions.

Given this context, let us take a deep dive into 2 FTSE listed housing-related stocks and explore their investment prospects:

1. GRAINGER PLC (LON: GRI)

Grainger is the UK’s biggest real estate landlord. It is a part of the FTSE 250 index. The company’s adjusted earnings, for the twelve months ended 30 September 2021, rose by 2 per cent year on year.

During the period, its profit before tax jumped by 53 per cent on a year-on-year basis. The company is set to hold its AGM and trading update later this week on 9 February.

Image source: Refinitiv

Image description: GRI share price and volume

Grainger’s shares closed at 295.00, down by 2.60 points or 0.87 per cent on 4 February 2022, while the FTSE 250 index ended at 21,712.04, lower by 255.76 points or 1.16 per cent.

The company has a market cap of £2,186.76 million and a one-year return of 7.98 per cent as of 4 February.

2. Rightmove PLC (LON: RMV)

Rightmove is among one of the biggest online real estate portals and sites in the UK. It belongs to the FTSE 100 index.

The company will release its full-year results (for the 12 months ending on 31 December 2021) later this month on 25 February.

Earlier, its H1 2021 revenue rose by 58 per cent to £149.9 million, up from £94.8 million in H1 2020. And its H1 2021 operating profit was higher by 86 per cent to £114.9 million, up from £61.7 million in the year prior.

Image source: Refinitiv

Rightmove’s shares closed at GBX 636.00, lower by 1.60 points or 0.25 per cent on 4 February 2022, while the FTSE 100 index ended at 7,516.40, down by 12.44 points or 0.17 per cent.

The company has a market cap of £5,388.18 million and a one-year return of 4.47 per cent as of 4 February.