One reason for this could be the uncertainty surrounding the UK’s economic outlook. With Brexit under a year away and the prospects for the economy being downgraded recently by the Bank of England, this may not be a major surprise. But for long-term investors, it could present a buying opportunity for UK-focused stocks such as Barratt.

Positive outlook

Despite the risks facing the UK economy at the present time, the outlook for housebuilders remains relatively upbeat from a fundamental perspective. Interest rates were kept on hold this month, and it seems unlikely that there will be more than one rate rise before the end of the year. This could help to support demand for new-build houses – especially since their supply remains somewhat limited.

Furthermore, Barratt could benefit from policies such as Help to Buy, which has been a major catalyst for housebuilders’ financial performance in recent years. It has focused first-time buyers on new-build properties, rather than older ones. Its continuation could mean that the housebuilding industry enjoys further growth over the next few years.

Low valuation

With Barratt due to post a rise in its bottom line of 6% this year and 5% next year, the company appears to be performing relatively well. Despite this, it has a price-to-earnings (P/E) ratio of around 10, which suggests that it may be undervalued at the present time.

Certainly, Brexit has the potential to cause disruption to the UK economy. Thus far, confidence among businesses and consumers has weakened, and this trend could continue over the coming months. Therefore, volatility for the company could be high. But with a positive outlook and a low valuation, it could outperform the FTSE 100 over the long run.

It’s a similar story with other UK-focused stocks, and there could be significant investment opportunities available for investors. Reporting on Monday was UK retailer Angling Direct (LSE: ANG), which may also offer growth at a reasonable price.

Impressive performance

The UK’s largest fishing tackle retailer reported revenue growth of 44% for the 2018 financial year. Its operating profit increased by 27%, with acquisitions and new store openings contributing to its overall performance. And with online sales increasing by 54%, it seems to be well-placed to capitalise on continued growth in digital services across the economy.

The investment made by the business in marketing campaigns and in customer service initiatives seems to be paying off. It has enjoyed a strong start to the current financial year, and is on track to meet its guidance.

With Angling Direct expected to deliver a rise in its bottom line of 63% in the current year, it appears to be a strong growth stock. Its price-to-earnings growth (PEG) ratio of 0.6 suggests that it has a wide margin of safety and may be able to deliver impressive share price growth despite the risks from Brexit.

The post Barratt share price: why is it underperforming the FTSE 100? appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Barratt Developments. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

It’s been a difficult three months for investors in Saga (LSE: SAGA). The over-50s products and services specialist has seen its share price decline by around 36% during the period, with a disappointing financial performance the reason.

However looking ahead, the company appears to have turnaround potential. Certainly, it could take time for it to deliver improved share price performance. But it could be worth buying alongside another stock which also appears to offer growth at a reasonable price.

Strong performance

The company in question is the UK’s leading fishing tackle retailer Angling Direct (LSE: ANG). It reported a positive trading update on Friday which showed that revenue for the year to 31 January was ahead of expectations, up 44% versus the prior year. It performed well across its retail and e-commerce divisions, with investment in its online platform and operations resulting in a 54% rise in direct sales.

Clearly, there is uncertainty facing the company. Structural changes in retail buying habits and weakness in the UK consumer outlook could result in greater competition. However, the company remains upbeat about its prospects, with its strong competitive position and the prospect of continued investment both having the potential to aid future performance.

Looking ahead, Angling Direct is expected to report a rise in its bottom line of 63% in the current year. Despite this, it has a price-to-earnings growth (PEG) ratio of just 0.5, which suggests that it may be undervalued at present. With a relatively loyal customer base and a dominant position in what remains a large industry, the company could be a worthwhile buy for the long run.

Return to growth

Of course, the outlook for Saga is still relatively uncertain. The company is due to report a 2% decline in earnings for the current year as it makes significant changes to its management structure and strategy following a disappointing period. But this is expected to have a positive impact on its financial performance, with earnings growth of 2% forecast for next year.

As such, it appears as though the company could take time to return to its previous rate of growth. In the long run though, that looks very achievable. Demand for a range of services among the over-50s is likely to remain buoyant, with an ageing population having the potential to create a tailwind for the company. And with Saga trading on a price-to-earnings (P/E) ratio of 8.9, it seems to offer a wide margin of safety. This could mean that it’s able to offer high capital growth potential in the long run.

The company also has a relatively high dividend yield as well. Following its share price fall, it stands at 7.7% and is covered 1.5 times by profit. This suggests that it’s not only highly sustainable, but could increase in future.

The post Saga plc isn’t the only bargain growth stock I’d buy today appeared first on The Twelfth Magpie.

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Peter Stephens owns shares in Saga. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.