Boris Johnson’s Conservative government announced a new, Help to Build scheme late last week. The new proposal is meant to help Britons get onto the property ladder amid the increase in house prices outstripping wage growth. So, here are three FTSE shares that I think stand to gain from this new programme.

Grafton

Grafton (LSE: GFTU) is a FTSE 250 constituent, and could be a beneficiary from the Help to Build scheme. This is because, unlike Help to Buy, the new initiative won’t directly benefit property developers such as Barratt and Taylor Wimpey. The loan is only available for houses built by self-builders and custom builders. As the scheme is set to last until 2026, the group could end up benefiting from a long-lasting tailwind.

Grafton is a builders merchant that sells all sorts of goods required to build a house. These include building materials, timber, decor, DIY items, and pipes. Its manufacturing segment only accounts for 5% of its revenue, so I expect the business’ distribution segment to fair better from the new builds. Not to mention, its history of producing healthy profit margins makes it an attractive stock for me to purchase. However, it’s worth noting that the current cost-of-living crisis could hamper sales figures.

Breedon

Breedon (LSE: BREE) is the UK’s largest independent construction materials firm. It is listed on the FTSE AIM index. The company produced a combine 31.6m tonnes of cement and aggregates in 2021. But more importantly, the board expects further growth this year.

Constructing a new house typically uses more than a 100 tonnes of cement and aggregates. Therefore, I expect the Help to Build scheme to act as a tailwind for the FTSE firm. That being said, Breedon’s revenue doesn’t just stem from building houses. It paves roads and builds other infrastructure as well. Given how well the S&P Global/CIPS UK Construction Purchasing Managers Index (A measure of how well the construction sector is doing) has been performing, Breedon shares could improve in the long term. Its share price also currently trades at a decent price-to-earnings (P/E ratio) of 13, so I see this as a buying opportunity for me.

Dunelm

Inflation continues to run rampant. Thus, new home owners will be looking for bargains in furniture. Thankfully, FTSE 250 staple Dunelm (LSE: DNLM) provides exactly that. Its everyday necessities have an average price of £6, while its furniture has a low average price of £120.

Management has stated its goal of bringing better value proposition to its customers too. This is evident as Dunelm introduced more entry price products and promotional buys, which should entice more customers and purchases.

The retailer still has to compete with IKEA though, as its competitor offers cheaper products in certain categories. That being said, consumers still seem to prefer shopping at Dunelm. This is due to its excellent customer service, such as cheaper deliveries. On that account, as long as Dunelm can maintain its competitive prices and good customer service, I see it being one of the few FTSE shares riding the tailwinds of the new Help to Build scheme.

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John Choong has no position in any of the shares mentioned at the time of writing. 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.

However, and this has always been the main reason why I haven’t invested, getting the mine into production was always going to be a tremendous challenge. Most mining projects take far longer than expected and come in over budget. For this reason, it was never going to be easy to figure out with any degree of certainty if Sirius would be a success.

Under threat

Unfortunately for shareholders, the company’s very existence is now under threat because it’s struggling to raise the finance required to complete the construction of its mining project.

Management has previously stated the company could run out of cash in the third quarter of 2019 if financing didn’t materialise over the summer. After pulling the issue of its high-yield bond, (required to unlock the bulk of the next stage of financing) at the beginning of August, Sirius only has a couple of weeks left to lock in extra capital, if management’s cash flow forecasts are to be believed.

I wouldn’t want to be exposed to that risk. Instead, I’d invest my money with mining group Breedon (LSE: BREE).

Highly profitable

Sirius and Breedon are both UK-based mining companies, but that’s where the similarities stop. Breedon is not reliant on just one large project. The company owns and operates mines and processing facilities across the UK, which produce construction materials.

For 2018, the group’s revenues topped £862m and City analysts reckon they will hit £949m this year. The City is forecasting a net profit of £83m for the full-year. Not only is Breedon highly profitable, but the firm also has an impressive track record of creating value for shareholders.

In the past six years alone, the company’s book value has grown at a compound annual rate of 39% as management as has reinvested operating cash flow back into operations. This reinvestment has helped the enterprise grow profits at a compound annual rate of around 47% since 2013.

Over the past 10 years, the company’s track record of value creation is even more impressive. The stock has produced a compound annual return of 15% since the end of 2009, turning every £1,000 invested into £4,440. At this rate of return, it would take just 15 years to turn a £100,000 investment into £1m.

Underperformance

However recently, shares in Breedon have started to underperform. The stock is down 21% over the past 12 months. I think this could be a fantastic opportunity for investors to buy into this millionaire-maker stock.

After recent declines, shares in Breedon are currently dealing at a forward P/E of just 12.4 even though City analysts reckon earnings per share can grow by 10-12% in the next two years. At this rate, it’s only going to be a matter of time before the stock price catches up to earnings growth.

Considering Breedon’s track record of value creation, I think the stock could go back to producing double-digit annual returns for investors. That’s why I would buy shares in Breedon over Sirius Minerals any day.

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Rupert Hargreaves owns no share mentioned. 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.

Take independent construction materials company Breedon (LSE: BREE) for example. Over the past 10 years, Breedon has produced an annualised return of 17% for investors, turning a simple £1,000 investment a decade ago into £5,500 today.

I see no reason why this trend can’t continue. Breedon is the largest single operator of aggregate mines and quarries in the UK, which means it is uniquely positioned to supply the country’s construction market — competitors can’t just start up a new quarry overnight. Management is using cash flow from the company’s established operations to expand into new markets, such as Ireland, and build out the firm’s presence here in the UK where it’s underrepresented.

Investing in growth 

The strategy is paying off. According to a trading update issued by the company today and after acquiring Lagan Group last year (one of its most significant acquisitions to date, taking it into the Republic of Ireland), revenues for the 10 months to the end of October exploded 32%, thanks also to increases in aggregate and asphalt volumes of 21% and 45%, respectively.

Going forward, management expects demand for construction materials in the Republic of Ireland to continue to grow at a double-digit rate, offsetting the weakness in the UK.

Right now, shares in this one-of-a-kind business are changing hands for just 13.6 times forward earnings, a multiple, which in my opinion, doesn’t do the company justice. 

Considering its unique position in the market, and record of earnings growth (net profit has grown at a rate of 60% per annum for the past five years), I would be willing to pay a high teens multiple to get my hands on the stock today. Management seems to agree. The group’s CEO, managing director, and several executive directors all recently splashed out to buy shares in the business. I think it could be worth following them.

Cash returns 

Like Breedon, Somero Enterprises (LSE: SOM) also has an impressive track record when it comes to shareholder returns. Over the past 10 years, shares in the company have returned 40.2% per annum for investors, turning every £1,000 invested into £52,000.

Can this trend continue? I believe it can. Somero is a world leader in the production of laser-guided construction equipment, and demand for its products is only growing. But what I really like about this firm is that it’s highly profitable. Last year, is reported an operating profit margin of 29.7%, and a return on capital employed — a measure of profit for every £1 invested in the business — of 55%.

Management is returning a significant amount of profit generated from manufacturing and selling the laser-guided equipment to investors. The shares currently support a dividend yield of 6.5%, and there’s just under £21m of net cash on the balance sheet. 

Considering all of the above, and with analysts expecting earnings to increase by 17% this year, I believe Somero’s valuation of 10.3 times forward earnings significantly undervalues the business, and its prospects.

The post Why I’d invest £2,000 in this stock with millionaire-maker potential appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Somero Enterprises, Inc. 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.

With that in mind, generating a sizeable nest egg by the time of retirement could be a shrewd move. Here are two shares which seem to offer growth at a reasonable price and could deliver high total returns in the long run.

Improving outlook

Reporting interim results on Wednesday was construction materials group Breedon (LSE: BREE). The company’s revenue increased 16% to £378.4m, while its underlying pretax profit was up by 15% to £37.4m. The company demonstrated resilience in what was a tough period for the industry. It was able to continue to invest in its operations, while also making four acquisitions.

Rising input costs and poor weather held back its performance to some degree. But the performance of the company’s Irish businesses helped to offset this to some extent. As a result, the stock is expecting to deliver results for the full year are in line with previous guidance.

With Breedon trading on a price-to-earnings growth (PEG) ratio of 1, it seems to offer good value for money. Its profit growth forecasts over the medium term remain encouraging – especially given the weakness that’s due to remain in place in the UK economy. However, with a positive long-term outlook for the UK and Irish construction sectors, the total returns on offer from the stock could be high.

Changing business

Also offering long-term growth potential is British American Tobacco (LSE: BATS). The company is experiencing a transitional period at the present time, with cigarette volumes falling and smokers gradually moving towards next generation products such as e-cigarettes. This trend is set to remain as new reduced-risk products are released. And with the company having a strong foothold in this space, it could be a major beneficiary of changes in consumer tastes over the coming years.

Price rises, though, are helping to offset cigarette volume declines in the near term. In the next financial year, British American Tobacco is forecast to post a rise in earnings of around 9%. This suggests that its strategy is working well, and that the decision to acquire the remainder of Reynolds could be a sound move.

With the stock having a PEG ratio of 1.4, it seems to offer a wide margin of safety. Alongside this, it has a dividend yield of 5.2% from a payout that is covered 1.5 times by profit. This suggests that it could offer a mix of growth, value and income potential that helps it offer a realistic alternative to the State Pension over the long run.

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Peter Stephens owns shares of British American Tobacco. 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.

However, I’ve stumbled across three stocks which I believe have the potential to generate tremendous returns for investors. They might not double in value, but I think these are some of the market’s best growth stocks.

Beating the market

One of the qualities I look for when assessing the future potential of any business is how it has performed in the past.

Since the end of the first quarter of 2016, shares in Harwood Wealth Management (LSE: HW) have returned 82% excluding dividends, compared to just 23% for the FTSE 250.

The last time I covered the company, it had just reported its numbers for the six months to the end of April, which showed an increase in assets under management (AUM) of around of a third. Following this update, analysts have reiterated their full-year growth forecasts. The City is expecting EPS growth of 463% for 2018 (giving a full-year P/E of 23.9) and 27% for 2019 (forward P/E of 18.8). If AUM continue to expand, I believe Harwood could surpass City growth targets for 2019. 

With approximately 24p per share in cash on the balance sheet, the stock is trading at a cash-adjusted 2019 P/E of just 16. In my opinion, this is far too cheap for for the wealth management group.

One of a kind 

My next stock with multi-bagger potential is Breedon (LSE: BREE). What I like about this business is that it already has a strong track record of creating value for investors. Over the past five years, through a combination of acquisitions and operational improvements, net profit has grown at a compound annual rate of 61%. This expansion has helped the company’s shares add 170% since mid-2013.

Breedon owns and operates over 300 quarries and concrete plants throughout the UK and Ireland. These assets have high barriers to entry — it’s not easy to start a new quarry in the UK. Breedon, therefore, has a virtual monopoly in some areas of the market.

With monopoly control of some parts of the UK aggregate market, Breedon should be able to continue to grow at a rapid pace for many years to come. With this being the case, I believe it is worth paying the current multiple of 15.8 times forward earnings for the shares.

Rising output 

My final potential blockbuster is Kaz Minerals (LSE: KAZ). Last week, after several years of restructuring the business, it declared its first dividend since 2012. This announcement has helped restore confidence among investors who have been questioning the group’s decision to pay $900m to acquire a Russian copper project from Roman Abramovich. 

Despite shareholder opposition, management believes this deal has legs and is a vital part of the group’s long term growth strategy. I’m inclined to side with management on this one. Over the past five years, executives have proven they know how to handle the business. After investing $3.5bn in two major copper mines, Bozshakol and Aktogay in Kazakhstan, production in 2016 leapt 73% to 140,000 tonnes and is projected to hit 300,000 tonnes for 2018. 

For the full year, analysts have pencilled in EPS of $1.40 giving a P/E of 5. In my opinion, the stock is worth significantly more. 

The post 3 stocks I believe could double your money appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share mentioned. 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.

Over the past eight years, shares in the company have added 491%, smashing the FTSE 100’s performance of just 31% over the same period as earnings have exploded.

A building boom across the UK, coupled with select acquisitions have helped Breedon grow earnings per share at a compound annual rate of 47.1% over the past six years. And today, the company has announced another substantial acquisition to boost its presence in the UK construction industry.

Expanding overseas 

Breedon has agreed to acquire Lagan Group Limited, a leading construction materials business based in Belfast, for a cash consideration of £455m.

Lagan, which has operations across the UK and Ireland, will add nine additional quarries and 13 asphalt plants to Breedon’s empire, as well as nine ready-mixed concrete plants. Last year, the firm generated earnings before interest tax depreciation and amortisation (EBITDA) of £46m and is expected to be double-digit accretive to Breedon’s underlying earnings per share in the first full year following completion.

As well as the earnings growth, management believes this deal provides the firm with “a stronger platform from which to pursue further organic growth and bolt-on acquisition” as it takes the group into the Irish market and cements its position as the most significant construction materials group in the UK and Ireland.

Further growth ahead 

Following the deal, I believe Breedon’s record of growth is set to continue and the stock’s valuation of 16.9 times forward earnings does not seem too demanding. 

That said, the one thing I am concerned about is the company’s debt, which after today’s deal will have risen to 2.6 times EBITDA. However, management is committed to reducing debt to one times EBITDA by 2020. With this being the case, I don’t believe debt is a threat to the business just yet.

Debt-free 

Another growth stock that has been smashing the FTSE 100 recently is Hostelworld (LSE: HSW).

Over the past 12 months, shares in this hostels operator have added 32% excluding dividends, compared to the FTSE 100’s return of -2%.

As my Foolish colleague Kevin Godbold recently pointed out, there’s a lot to like about this business including its debt-free balance sheet, and rapid earnings growth. A few days ago the firm reported earnings growth of 60% for 2017 thanks to its differentiated offering in the hostel market, which is expected to grow at around 5% a year until 2020.

The company has also attracted the attention of the star hedge fund manager Neil Woodford, who seems to like the shares for their income potential — both the Neil Woodford Equity Income fund and his Income Focus Fund own the stock.

It’s difficult to argue with this view as Hostelworld is an income champion. Last year, the group distributed €0.28 per share to investors for the full year, giving a yield of 6.1% and analysts are expecting the firm to pay out €0.16 in 2018 year for a yield of 3.7%. The company has a history of beating forecasts when it comes to dividends, however, so this might turn out to be a conservative forecast. 

With a debt-free, cash-rich balance sheet, the group can certainly afford to pay out more to investors. 

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Rupert Hargreaves owns no share mentioned. 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.

Building market share

Staffs Concrete’s fleet of eight mixer trucks and two concrete pumps specialise in delivering small loads of ready-mixed concrete and screeds to customers in Staffordshire. The enterprise will sit well as part of Breedon’s existing mini mix operations, which serve the West, East Midlands and East Anglia. Chief executive Mike Pearce said the acquisition “further strengthens our overall position in a key market.” 

Breedon runs a big operation with, at a recent count, a cement plant, two cementitious import terminals, around 60 quarries, more than 30 asphalt plants, over 200 ready-mixed concrete plants and three concrete products plants. The firm supplies cementitious products, crushed rock, sand, gravel, asphalt, ready-mixed concrete, mortar, various concrete products and contract surfacing services.

Some investors are convinced that UK-facing cyclical businesses like this one are poised for a prolonged period in the economic sun, and recent results demonstrate Breedon is trading its concrete socks off right now. Last month’s full-year report revealed revenue up 43% compared to the year before, underlying earnings per share 19% higher and a reduction of 31% in net debt.

Strong trading

We’ve seen a similarly strong trading performance from landscape products supplier Marshalls (LSE: MSLH). Over the last five years, the share price is up around 230%, driven by robust annual increases in revenue and earnings. Much of the growth has been organic, but the October 2017 acquisition of CPM Group Ltd contributed to the revenue reported in January’s trading update, and Marshalls said the operation “has traded strongly since joining the Group.”

Marshalls is another UK-facing cyclical that could do well from here. The firm supplies hard landscaping products to the domestic, public sector and commercial-end markets such as aggregates, street furniture, minerals, stone cladding, paving, water management items, lighting, walling and mortars – all stuff that’s in high demand when economic conditions are booming and in low demand when conditions get tough.

So which stock should you buy? City analysts following Marshalls expect earnings to increase 11% during 2018 and 8% in 2019. They expect earnings at Breedon to rise 8% in 2018 and 11% in 2019, so there’s nothing much differentiating the two on earnings growth. Meanwhile, at today’s share price close to 416p, Marshalls forward price-to-earnings (P/E) ratio for 2019 sits at 16. At 80p, Breedon’s is also 16. Nothing between them on the P/E rating either. However, Marshall’s pays a dividend and expects to yield 3.7% in 2019, whereas analysts expect Breedon to start paying a dividend that year, which will come in at a yield of just 0.4%, or so.

We could say that Breedon offers greater value to investors than Marshall because of dividends, but I think the P/E ratings are too high for both firms at this mature stage in the economic cycle. So I’m cautious on both of them and will look elsewhere for investments to propel me to financial independence.

The post Should you buy multi-bagging stocks Breedon Group plc or Marshalls plc? appeared first on The Twelfth Magpie.

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Kevin Godbold has no position in any of the shares mentioned. 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.

Brexit winner?

Landscaping products supplier Marshalls (LSE: MSLH) is a great example of this, with the FTSE 250-listed company delivering exceptional levels of growth in recent years, which in turn has left its shareholders enjoying spectacular returns.

In fact, Marshalls has defied the Brexit doomsayers and gone on to deliver a whopping 90% increase in its share price following the EU referendum in June 2016, and a more modest 40% gain since my own recommendation in August the same year.

UK’s leading manufacturer

The group is based in Elland, West Yorkshire, and is now the UK’s leading manufacturer of superior natural stone and innovative concrete hard landscaping products, supplying the construction, home improvement and landscape markets.

Marshalls operates its own quarries and manufacturing sites throughout the UK, including a national network of manufacturing and distribution sites, and has operations in Belgium with worldwide sales representation so it has control of its supply chain and a strong foothold in the EU.

Wider economic uncertainty

In its most recent trading update the group reported an 8% jump In revenues to £430m for the year to the end of December, including a £9m contribution from CPM group which has been trading strongly since it was acquired by Marshalls last October.

Most encouraging of all is that despite the Construction Products Association (CPA) reducing its 2018 forecasts to reflect the wider economic uncertainty, Marshalls has continued to outperform the CPA’s growth figures. At a slightly expensive 16 times forecast earnings, the shares are still a buy.

Brexit sell-off

Another construction materials firm that has enjoyed tremendous success in recent years is AIM-listed Breedon Group (LSE: BREE). Perhaps not surprisingly the share price of the group formerly known as Breedon Aggregates has followed a very similar trajectory to that of its FTSE 250 counterpart, having suffered a similar panic-induced sell-off following the 2016 referendum.

But as weaker investors were left nursing their losses, those that kept the faith have been rewarded handsomely. Not only did the company’s shares fully recover from the Brexit sell-off, but a year later went on to reach new all-time highs of 92.5p, a gain of 30% on my original buy call in October 2016.

UK’s largest

Forecasters are expecting new infrastructure and housing work to show healthy growth over the next two years, and with these market segments accounting for approximately two-thirds of Breedon’s end-use markets I believe now is not the time to be taking profits. Breedon is already the UK’s largest independent construction business, but I think there is still plenty of scope for it to grow even bigger.

Trading on a price/earnings ratio of 17, I see Breedon as another worthy construction play.

The post Buying these 2 stocks now could make you a millionaire retiree appeared first on The Twelfth Magpie.

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Bilaal Mohamed has no position in any shares mentioned. 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.

Today the company announced yet another deal. It has agreed to acquire from Tarmac four quarries and an asphalt plant for a total consideration of £16.5m. These assets will be paid for by the transfer to Tarmac of 27 of Breedon’s ready-mixed concrete plants and a payment of £4.9m in cash.

This deal is part of the firm’s aim to expand its aggregate portfolio and streamline its ready-mixed concrete network. While it’s not expected to have a material impact on earnings, the deal does add approximately “25m tonnes to the group’s mineral reserves and resources.“

According to CEO Pat Ward: “This deal brings significant benefits: it adds to our reserve base; it is margin-enhancing; it releases value from peripheral ready-mix plants; and it will enable us to replace third-party aggregates providers with our own sources of supply.“

A good fit for the group

I have every confidence in management and believe that this deal is in the best interest of shareholders. You see, over the past five years, Breedon’s growth has been nothing short of impressive, and shareholders have been well rewarded. Since December 2012 the stock has returned 320%!

It has established its self as the UK’s leading construction materials group, which gives it a strong base to grow from in the years ahead. City analysts are projecting earnings per share growth of 14% for each of the next two years. If growth continues at this rate, earnings per share will have doubled within five years. And if the company can double earnings per share in that period, the shares look highly attractive today. 

Doubling 2016’s earnings of 3.5p per share gives 7p, or a forward (five-year) P/E of 12. For the past half-decade, the shares have traded at an average P/E of 28. If the valuation returns to this level, shares in Breedon could hit 196p, a gain of 133% from current levels. 

Undervalued growth 

Keller Group (LSE: KLR) can’t boast the same historical growth as Breedon, but during the next few years, shares in the engineering firm look set to produce huge returns for investors. 

It is the world’s largest geotechnical contractor, providing technically advanced geotechnical solutions to the construction industry, a highly specialist line of business. Since 2012, the company’s earnings per share have doubled as it has expanded into new markets, but earnings are lumpy. 

For example, this year is expected to be a record one for the group’s Europe, Middle East, and Asia arm thanks to a $180m contract in the Caspian region. However, after this contract is completed at the end of 2017, profit in 2018 is expected to be “materially below what should be an excellent 2017 result.“

The unpredictability of earnings is holding back Keller’s shares. Right now the stock is trading at a forward P/E of 10.6, despite analyst expectations for earnings growth of 18% this year. 

Still, in my opinion, Keller’s low valuation offers an opportunity for value investors. If the company can replicate its performance of the past five years, and double earnings per share again, the shares could double from current levels. 

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Rupert Hargreaves owns no share mentioned. 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.

Buy, sell, or hold

Nevertheless, I decided to back the AIM-listed construction group to continue its upward surge and deliver even greater capital gains over the coming months. The business certainly didn’t disappoint, with group revenues for 2016 up by a massive 42.8% to £454.7m, and underlying earnings rising 57.8% to £59.6m, including a five-month contribution from newly-acquired Hope Construction Materials.

With the shares now up 24% on my original recommendation I once again face the dilemma of whether to stick with my original ‘buy’ rating, downgrade to a ‘hold’, or even a ‘sell’ in a bid to secure those paper profits.

Only human

First and foremost we have to admit that we are only human, and being successful in investing is as much about mastering our own emotions as it is about fundamental or even technical analysis. Therefore I would suggest that those who have seen the value of their shares at least double over the past few years could perhaps sell half their holding, thereby banking some profits, removing further risk, and achieving peace of mind, all in one fell swoop.

This morning’s interim results showed that the business can continue to deliver strong growth, as revenues doubled to £326.3m for the first six months to 30 June, with pre-tax profits also rising significantly from £20.9m to £31.2m over the same period. I truly believe that Breedon still holds appeal for new investors. With earnings forecast to rise by a further 35% over the next two years, a P/E ratio of 18.3 for 2018 is still not too demanding in my view.

New products

Meanwhile Marshalls (LSE: MSLH) is another top performer from the construction sector that I’ve had my eye on for quite some time. Indeed, shares in the West Yorkshire-based business have soared since my initial recommendation less than a year ago (August 2016), gaining 32%. But I believe there’s plenty more upside still to come.

In its last trading update the UK’s leading hard landscaping manufacturer reported a 6% rise in group revenues to £135m for the four months to the end of April, with a particularly strong performance in the domestic end market, where sales rose by 13% compared to the same period a year earlier.

I believe Marshalls can continue to grow at a reasonable pace, with its significantly increased capital expenditure programme making good progress with new product development, resulting in an encouraging pipeline of new products. Despite a 42% gain over the past year, the shares still look good value given the growth outlook, with the P/E ratio dropping to 17 after an anticipated 17% rise in underlying earnings over the next two years.

The post Why I’d buy these 2 rising construction stocks appeared first on The Twelfth Magpie.

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Bilaal Mohamed has no position in any shares mentioned. The Motley Fool UK has recommended Marshalls. 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.