The FTSE 250 is a great place to go bargain hunting right now. My research indicates that 49 companies have slumped 10% in value or more during the last six months. A lot of these reversals are hard to justify, in my view.
Many of these FTSE 250 fallers could continue to struggle before things improve. But over the long term, I’m confident a large number can spring back from current levels, hopefully making investors today a healthy profit.
Ibstock (LSE:IBST) is one such company whose shares I believe are too cheap to ignore. Want to know why?
Under pressure
Since early December, Ibstock’s share price has plummeted 29%, reflecting fears that imminent interest rate hikes could derail new home construction. Ibstock is the UK’s largest brick manufacturer by volume.
The housing market is already showing signs of strain. According to Halifax, average UK home values dropped 0.6% year on year in May, the first such reversal in 2026.
UK clay brick deliveries last year slumped to their lowest since 2009 due to weak housebuilding and renovation activity. In recent months, major housebuilders Barratt Redrow and Taylor Wimpey have scaled back land approvals. Could production targets be downgraded next?
Get ready for the recovery
Yet the long-term outlook for the FTSE 250 remains bright in my view. Make no mistake: Britain is facing a growing housing crunch as the domestic population booms. Official forecasts suggest the number of UK residents will soar by 1.7m between 2024 and 2034, to 71m. That suggests an awful lot of new houses will be needed.
That’s not the only profits driver Ibstock can look forward to. The UK has one of the oldest housing stocks in the world, with more than a third of properties built before 1945. This should support rising brick demand from the repair, improvement and maintenance (RMI) sector when economic conditions improve.
According to RBC Capital:
The shape of the recovery is difficult to predict, but we expect UK clay brick volumes to recover driven by housing completions and a customer restocking cycle.
Ibstock’s significant capacity puts it in the box seat to seize the eventual market recovery. It can produce up to 700m bricks a year when all its factories are fully firing. That’s equivalent to roughly 40% of the UK’s total capacity.
A top value share?
Right now, Ibstock shares trade on a forward price-to-earnings growth (PEG) ratio below 1 for each of the next three years. These are:
- 0.1 for 2026.
- 0.3 for next year.
- 0.4 for 2028.
In my view, this makes the brickmaker one of the best value stocks to consider. Shares with low valuations like this can offer even greater scope for share price gains when the market improves.
I already have considerable exposure to the housebuilding and construction materials sectors, including Ibstock shares. It’s the only reason I’m not preparing to buy the FTSE 250 share today.
Should you invest £5,000 in Ibstock Plc right now?
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Royston Wild owns shares in Ibstock, Barratt Redrow and Taylor Wimpey.
