This UK stock has taken an absolute beating. It’s at the sharp end of a brutal sector sell-off and the pain isn’t over yet. So does that make it a screaming buy?
The stock in question is FTSE 100 housebuilder Barratt Redrow (LSE: BTRW). Its shares have crashed 43% over the last 12 months, and a mighty 65% over five. A lot of readers will be thinking the same thing: we’d be stark staring mad to buy such a flop. Loads of UK blue-chips are bouncing along, despite the Iran crisis. Why choose one that’s bombed out?
Would you buy a stock like this?
At The Twelfth Magpie we favour buying shares that have taken a beating. It allows us to bag them at a lower valuation, lock into a higher yield and benefit when the business cycle swings back in their favour.
It’s not a foolproof approach. It’s important to take a close look at the underlying business, because turning around a troubled company takes time.
After the financial crisis, when the Bank of England slashed interest rates almost to zero, house prices raged out of control. Buyer incentive schemes such as Help to Buy threw more fuel onto the affordability fire.
Then in 2022, the cycle turned and inflation and mortgage rates rocketed. That hit sales and prices, while also driving up the cost of labour and materials, squeezing margins from both sides. In 2023, Help to Buy was scrapped. And now the Iran war is driving mortgage rates back up. Stamp duty adds to buyer costs. Despite all of this, Barratt Redrow is still making money, as my list shows:
- 2025 – £488.3m
- 2024 – £385m
- 2023 – £884.3m
- 2022 – £1,054.8m
- 2021 – £919.7m
Sadly, it’s only making half as much money as it was just three years ago. Yet I should point out that the 2025 figure would have been £591.6m, but for the cost of buying up Redrow.
Is this stock good value or a trap?
Here’s another positive. The Barratt Redrow share price looks good value with a price-to-earnings ratio (P/E) of just 10.3. That compares to 16.2 for the FTSE 100 as a whole. Underlying pre-tax profits are expected to rise 16% to £568m in the 2026 financial year. It’s hardly the end of the world.
Investors should still tread carefully. The UK economy and housing market are in a poor state. Deutsche Bank predicts a 5% drop in nominal house prices this year. Also, Barratt Redrow has cut its dividend. The trailing yield may be 6.7% but the forecast for 2026 is just 5.5%. There’s a chance dividends could be cut again.
I’m personally exposed to the fortunes of the housing market through Taylor Wimpey, and that’s proving equally painful. Yet the bad news is out there and at some point we could see a massive recovery. Investors with long-term outlook and high tolerance for risk might still consider drip-feeding money into Barratt Redrow today. They don’t have to be mad. Just brave, contrarian and patient.
Should you invest £5,000 in Barratt Redrow right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Barratt Redrow made the list?
Harvey Jones owns shares in Taylor Wimpey.
