Development play

Yet it also looks hugely buyable as it yields 8.27% and trades at a bargain valuation of 6.6 times earnings, well below the FTSE 100 average of 15.91 times earnings.

These are compelling figures, but there are dangers, as there are with every stock, including St. Modwen Properties (LSE: SMP), which specialises in regenerating brownfield and urban sites. In contrast to BT, its share price has climbed 26% over the past couple of years, although with a fair share of volatility.

Dividend hike

St. Modwen is up around 2.5% today after publishing its final results for the year to 30 November 2018. These showed a 4.3% rise in its full-year net asset value per share to 470.4p, although profits came in flat at £60.5m.

However, it pleased investors by lifting its total dividend 13.1% to 7.1p a share, while CEO Mark Allan hailed another positive year despite UK economic uncertainties. It made £529m of disposals as it aims to reduce company borrowings and focus its portfolio on sectors with the best structural growth prospects.

Marginal return

St. Modwen also increased house-building volumes and is now “well placed to deliver a meaningful improvement in our return on capital and earnings in the coming years,” Allan said. The £917m FTSE 250-listed company has a modest price-to-book value of just 0.9, only slightly higher than when I last examined it 18 months ago. Operating margins are decent at 22.8%. But with a return on capital employed (ROCE) of just 6%, and a yield of 1.52%, I can’t get too excited right now.

BT is certainly exciting, if not always in a good way, but as Roland Head points out, there are early signs that outgoing chief executive Gavin Patterson’s turnaround plan may be showing some positive results.

Telecoms trouble

There are a lot of FTSE 100 stocks in the same position as BT right now, although not quite as extreme, thankfully. Earnings growth is slowing as the economy and consumers retrench. It operates in competitive markets, with minimal customer loyalty and massive focus on price. Attempts to diversify, such as BT’s move to pinch Premier League broadcast rights from Sky, can be a dangerous distraction.

BT has the added worry of debt, currently £11.1bn, and still has to plug a £4.5bn pension deficit. So there are good reasons why it’s so cheap, especially with revenues forecast to fall 2.7%, and earnings per share by 5.2%.

BT or not BT?

This is a big and complex company in a mature industry and it’s very hard to get a grip on whether its separate divisions are really going to deliver. Many fear the dividend is at risk although cover is currently 1.8, so it may be safe a little while longer. BT remains risky but potentially highly rewarding, especially at today’s low, low price.

The post Does the low BT share price and sky-high 8% yield make it bargain of the year? appeared first on The Twelfth Magpie.

More reading

• Why has the BT share price almost doubled – yet gone nowhere?
• Down 16% in 5 weeks, are BT shares just too good to miss?
• Down 16% to around £2.03! Here’s where BT’s bargain-basement shares ‘should’ be trading right now
• The BT share price is already up 91.5% in 2 years! Can it hit £3?
• Want to get rich on passive income? Here are some mistakes to avoid

harveyj 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.

However, the UK property sector could face a period of significant uncertainty. Consumer confidence remains at a low ebb, and with house prices failing to offer gains in recent months there could be difficulties ahead. As such, is the housebuilder worth avoiding alongside a sector peer that released an update on Tuesday?

Mixed outlook

With Brexit now only a matter of months away, it is perhaps unsurprising that consumers are feeling anxious about the future. Higher levels of inflation have only recently subsided, and with the prospects for the UK economy’s growth rate being downgraded over the last couple of years, the outlook for the property industry seems to be challenging.

At the same time though, there remains a fundamental imbalance between demand and supply. This means that with interest rates expected to remain low over the next few years, demand for new housing may continue to outstrip its supply.

Demand growth may be reinforced by government action, with various schemes including Help to Buy having had a positive impact on the housebuilding sector. Given that a change in government is not anticipated over the next few years, it may be reasonable to assume that Taylor Wimpey and its peers will continue to benefit from first-time buyers receiving government support.

Low valuation

Of course, Taylor Wimpey is a relatively cheap stock. Given that it is due to report a rise in earnings of between 4% and 5% per annum over the next two years, it could be argued that it justifies a higher valuation. That’s especially the case since it offers a dividend yield of nearly 8%, as well as a strong balance sheet and large land bank. As such, and while its short-term share price performance may be volatile, now seems to be a perfect opportunity to buy it for the long run.

Improving performance

Also offering a low valuation within the property sector is St. Modwen (LSE: SMP). The diversified regeneration specialist released a trading update on Tuesday which showed that it has made a solid start to the financial year, with it being on track to meet its guidance for the full year.

The company has been able to make progress with its new strategy which was launched a year ago. This will see it draw on the significant potential within its pipeline, as well as focus on execution to a greater degree in order to deliver growth in profitability and return on capital. For example, it has shifted its portfolio towards assets with the strongest structural growth prospects, while also accelerating its industrial/logistics development activity.

With St. Modwen trading on a price-to-book (P/B) ratio of 0.9, it seems to offer a wide margin of safety. As a result, and with its performance being strong in recent months, it could offer high return potential.

The post Is the Taylor Wimpey share price the biggest value trap in the FTSE 100? appeared first on The Twelfth Magpie.

More reading

• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• This 7.5% yielding passive income share is at a 13-year low! Time to consider buying?
• This 7.7% yielding dividend stock trades at a 13-year low – time to consider buying?
• £10,000 in these 3 FTSE 250 stocks could generate £982 of passive income over the next 12 months!
• How much would you need in a Stocks and Shares ISA to earn £33,814 a year in dividend income?

Peter Stephens owns shares of Taylor Wimpey. 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.

But so far the FTSE 100 has only fallen by about 7% from the all-time high seen in mid-January. After a long run of record highs, a pull-back like this isn’t surprising.

With most major global economies apparently in good health, there’s no sign that corporate profits are about to collapse. So lower share prices could be good news, giving us higher dividend yields and cheaper valuations on stocks we’d like to buy.

A 6% yield I’d take

Income hunters looking for high-yield stocks will probably have considered telecoms giant Vodafone Group (LSE: VOD). It’s been an unusual stock in recent years, maintaining a generous but uncovered dividend while investing heavily in network upgrades.

This approach seems to be paying off. January’s trading update showed that organic service revenue rose by 1.1% to €10.2bn during the three months to 31 December.

It’s probably fair to say that the group’s future growth will be fairly slow. But demand for mobile broadband only seems likely to grow. I believe we will also see greater convergence between mobile and home broadband in the future. I expect Vodafone to become an attractive cash cow, controlling costs while squeezing more revenue from its assets.

Broker upgrades

Management expect earnings before interest, tax, depreciation and amortisation (EBITDA) to rise by about 10% this year, giving a mid-point estimate of €14.85bn. Free cashflow before spectrum payments is expected to “exceed €5bn”. To put this in context, I estimate the dividend will cost about €4bn.

City analysts also appear to have a positive view on the telecoms heavyweight. Consensus forecasts for 2017/18 net profit have risen by €479m to €2.8bn over the last three months.

Vodafone shares offer a dividend yield 6.1% of at current levels. I believe this could be a good long-term income buy.

A better option for dividend growth?

With stocks falling across the board, today’s figures from St Modwen Properties (LSE: SMP) were never going to get a favourable reception. But the firm’s shares have only edged 1.5% lower, in line with the wider market.

The figures themselves seem encouraging to me. Net asset value per share rose by 4.6% to 450.9p last year, while the group’s pre-tax profit climbed 5.1% to £70.3m. The dividend was increased by 4.7% to 6.28p per share, giving a yield of 1.6%.

Although this isn’t a high yield, the group’s measure of total return for last year seems quite attractive to me, at 6%. This represents growth in the stock’s net asset value per share plus dividends paid.

A different approach

St Modwen Properties develops and invests in both commercial property and residential sites. The group’s strategy is to aim for a mix of capital gains and income. Management expects to complete on £326m of commercial property this year, an increase of 38% on last year. Sales volumes of residential property are expected to rise by 25% during the year.

These shares now trade at a 14% discount to their net asset value of 450p, with the potential for further earnings growth over the coming year. I think St Modwen could be worth a closer look at current levels.

The post Why 6% yielder Vodafone Group plc isn’t the only dividend stock I’d buy today appeared first on The Twelfth Magpie.

More reading

• Here are 2 FTSE shares I’m excited about this July — and 1 I’m avoiding
• Which will reach £2 first, Lloyds or Vodafone shares?
• 3 value stocks under £3 to consider in June

Roland Head 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.

Despite this, here are two shares which appear to trade on very low valuations given their positive outlooks. As such, they could be worth buying today and may help to make you a millionaire retiree.

Impressive performance

Reporting on Thursday was property regeneration specialist St. Modwen (LSE: SMP). The company’s trading update showed that it has continued to deliver on its strategy, making solid progress. It has focused its energy on the higher performing industrial and logistics sector, as well as its homes business. Beyond this, the rest of the company’s diverse portfolio continues to perform well and it expects to report results for the full year that are in line with previous guidance.

With a price-to-book (P/B) ratio of 0.9, the company appears to be cheap at the present time. This may be because investors are generally apprehensive towards the property sector, with an uncertain economic outlook being at least partly to blame. In the near term, there could be falls in valuations across the sector, but in the long run there may be an opportunity to generate high returns.

St. Modwen is forecast to deliver a rise in its bottom line of 9% in the next financial year. This suggests that its trading conditions remain positive, while its strategy offers an opportunity for it to add value for investors. Therefore, now could be the perfect time to buy it while it offers a wide margin of safety.

Turnaround potential

Also trading on a relatively low valuation at the present time is Standard Chartered (LSE: STAN). It has experienced a turbulent period that has seen its bottom line move into the red. However, it was able to return to profitability last year and is expected to deliver growth in 2017 and in 2018. In fact, its pre-tax profit is forecast to rise from £315m last year to over £1.3bn in 2017. This is due to be followed by a further increase in pre-tax profit to over £1.8bn next year.

Despite such a positive outlook for the business, it trades on a price-to-earnings growth (PEG) ratio of just 0.5. This suggests that investors remain cautious about its outlook as global growth remains uncertain to some degree, with political risk likely to be high for some time.

Although many shares in the FTSE 350 have risen to all-time highs, Standard Chartered appears to offer clear upside potential. With a strategy which has already launched a successful turnaround, new investors in the stock may be able to benefit from a potentially rapid rise in financial performance in 2018 and beyond.

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

More reading

• Down 7% to around £19! Is now the time for investors to consider this FTSE 100 banking giant’s deeply-undervalued shares?

Peter Stephens owns shares in Standard Chartered. 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.

Another problem with property investment is that buildings are a very sticky asset. As we saw just after the referendum vote last year, when several property funds began to deny investor redemption requests, investing in publicly traded property stocks can be a risky business during times of uncertainty. 

With this being the case, I’m cautious about the property stocks that I choose to include in my portfolio as the UK’s economic outlook becomes more uncertain. 

Deteriorating fundamentals 

St Modwen Properties (LSE: SMP) is one company that I want to avoid. It is a regeneration specialist. The company buys existing property assets and then does them up to a particular specification before trying to sell them on. This leaves it open to market fluctuations. If the group finds itself holding assets that it can’t sell for more than it acquired during a period of uncertainty, losses will result, and shareholders will suffer.

The market is already sending a clear warning that investors might do best to avoid this business. According to a trading update issued by the firm today, the company’s EPRA net asset value per share was 468p at the end of May, up 1.7% from the last reported November 2016 figure of 460p. However, at the time of writing shares in the company are trading at 358p, a full 22.2% below the reported net asset value. The discount quite clearly shows that the market is sceptical about the value of St Modwen’s property portfolio. 

And it seems as if investors are right to give the firm a wide berth. According to today’s trading update, trading profit for the six months ending May 27 came in at £26.4m, down from £34.4m in the prior period while borrowings rose marginally to give a loan-to-value ratio of 33.1%, up from 30.5%. With debts rising, profits falling and the market turning its back on the company, it might be wise to avoid St Modwen.

Riding high but time to avoid  

While St Modwen is suffering from a lack of support, Henry Boot (LSE: BOOT) has the opposite problem. Year-to-date shares in the company have added just over 50%, and they now trade at a significant premium to net asset value. For the year ending 31 December 2016 the company reported a 74% increase in revenue and 23% increase in earnings per share to 21.5p. Net asset value per share rose 5% to 177p at the end of 2016 indicating that today, the shares trade at a premium of 77% to net asset value. What’s more, after recent gains, shares in the residential and commercial property developer trade at a forward P/E of 12 and support a dividend yield of only 2.5%. 

These ratios don’t leave much room for manoeuvre if the UK property market starts to splutter. With this being the case, I believe there are better property stocks out there that may offer a more attractive opportunity without the premium valuation.

The post Why I’d dump these ‘safe’ stocks appeared first on The Twelfth Magpie.

More reading

• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?

Rupert Hargreaves 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.

Saint and sinner

St Modwen Properties (LSE: SMP) styles itself as the UK’s leading regeneration specialist, with a 30-year track record in commercial and residential developments. The company has a market cap of £793m, a current portfolio value of £1.75bn and more than 100 projects underway. It aims to build business parks and town centres on former industrial estates and disused brownfield sites, with projects including the £1bn Longbridge scheme, and the £450m Bay Campus Swansea University revamp, which it now plans to sell.

Its share price has seen plenty of volatility, it currently trades 8% lower than it did three years ago, yet is up 116% over five years. Like many developers, St Modwen has recovered well since Brexit, and now stands 20% higher than six months ago. It recently hiked its dividend 4.3%, lifting it from 5.75p to 6p a share, and now trades on a forecast yield of 1.8%, nicely covered four times.

Resilience

On Wednesday, chief executive Mark Allen announced that St Modwen is to accelerate its commercial development activity and grow its residential and housebuilding business, building on a positive start to the year. He said the firm’s portfolio and wider business has shown “resilience in the face of broader market uncertainties,” and after Thursday’s election shock, that claim is about to be put to the test.

The current valuation of 14.8 times earnings looks reasonable enough, but the forward valuation is higher, at 18.8 times, thanks to a projected 25% drop in earnings per share (EPS) in the year to 30 November 2017. Growth of 3% is expected after that. However, St Modwen’s 35.9% operating margins and price-to-book (P/B) ratio of just 0.8 offer cause for comfort. Its halo may have slipped lately, but it can still shine.

Who’s Nex?

Nex Group (LSE: NXG), formerly ICAP, provides trading platforms, tools and expertise for global banks, asset managers, hedge funds and corporates. Its share price has been trading positively, up 26% over the past 12 months, as the company has boosted revenues and profits, while simultaneously warning that activity has been subdued.

In May, the financial broker posted a healthy 18% rise in full-year revenues from £460m to £543m, with statutory pre-tax profit spiralling from £27m to £120m. It also sold ICAP Global Broking to TP ICAP for £1.3bn, which chief executive Michael Spencer claimed delivered exceptional value to NEX shareholders. However, he also warned of a tough market environment, with trading down due to low market volatility.

Going for broke

Nex doesn’t look so cheap trading at 27.97 times earnings. However, it does trade on a low forecast price-to-earnings growth (PEG) ratio of just 0.7, which suggests it is undervalued. The dividend looks tempting with a yield of 5.9%, but watch out, that is forecast to fall to 2.1%.

Anticipated EPS growth of 31% in the year to 31 March 2018, followed by 19% the year after, do inject an element of excitement. I am also impressed by plans to increase operating margins to at least 40% in 2017/18, a large increase from 27.8% today. It could be an exciting play if market volatility returns. As it may. 

The post Two troubled FTSE 250 dividend stars: should you buy them? appeared first on The Twelfth Magpie.

More reading

• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?

Harvey Jones 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.

Strong performance

Reporting on Wednesday was regeneration specialist St. Modwen (LSE: SMP). The company’s portfolio and wider business has performed in line with expectations despite the uncertainties which have been a feature of the broader market. Looking ahead, it expects to accelerate its commercial development activity. A key reason for this is the good ongoing levels of occupier demand across the UK for both new and existing commercial space, which looks set to continue over the medium term.

St. Modwen will also seek to grow its residential and housebuilding business. The sector has been resilient since the start of the year, with continued robust demand for new homes. The company is currently active on 16 sites across the UK and sales volumes are due to rise by 15% in the first half of the year. Alongside a possible growth in its regeneration capabilities, the company appears to have significant growth potential within both the commercial and residential property markets.

Despite its upbeat outlook and sound strategy, St. Modwen continues to trade on a relatively enticing valuation. It has a price-to-book (P/B) ratio of just 0.8, which suggests that the market has already included a wide margin of safety in its valuation. As such, now could prove to be a perfect time to buy it for the long run.

Solid growth

As mentioned, the UK property industry faces an uncertain future. This is at least partly due to the potential challenges of Brexit, which could mean that buying a relatively consistent performer may be a shrewd move. With a strong track record of earnings growth, property investment and development company Henry Boot (LSE: BOOT) could be a logical option. It has increased its bottom line in each of the last four years, with further growth expected in the current year.

In fact, Henry Boot is expected to report a rise in its bottom line of 18% in the current year. This puts its shares on a price-to-earnings growth (PEG) ratio of only 0.7, which indicates that they may offer significant upside potential. The company also offers a yield of 2.6% from a dividend which is covered 3.3 times by profit. This suggests that rapid dividend growth could lie ahead for the business over the medium term. Therefore, with inflation rising and expected to continue its recent trend, Henry Boot could prove to be a potent income and value play in future years.

The post 2 super value stocks I’d buy right now appeared first on The Twelfth Magpie.

More reading

• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?

Peter Stephens 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.

A resilient performance

Regeneration specialist St. Modwen (LSE: SMP) has delivered a robust performance in the past few months despite broader market uncertainties. It expects performance in the second half of the year to be broadly in line with that reported for the first half. And it has experienced resilient regional occupier demand across the UK for both new and existing commercial space.

This means that St. Modwen feels confident enough to make further investments, including £45m in new acquisitions. In addition, it has made pleasing progress with its commercial development programme. Over 750,000 sq ft of commercial space has been completed and sold or leased, with further development due within what is a well-stocked pipeline.

In addition, the company’s housebuilding arm has seen demand remain relatively high during the second half of the year. It has started work on three new sites since July and expects profit from the division to be higher in the second half of the year than in the first.

Strong rental growth

Today also saw an upbeat update from UK and European property investment company Hansteen (LSE: HSTN). It reported rental growth in the UK and Germany, with increased investor appetite for multi-let light industrial property from both national and international investors. This bodes well for the company’s medium-term outlook, since it shows that confidence in the sector remains relatively high.

The company’s vacancy rate was reduced to 4.2m sq ft, which is a fall of 10.2% versus the same time of last year. During the five months to 30 November, Hansteen delivered 836 lettings and lease renewals for more than 4.3m sq ft, with further deals in the pipeline.

Outlook

While the two companies have performed relatively well and are upbeat on their futures, their margins of safety are relatively narrow. For example, St. Modwen trades on a price-to-earnings (P/E) ratio of 15.1 and is expected to report a fall in earnings of 14% in the next financial year. Although Hansteen’s bottom line is forecast to rise by 6% next year, its P/E ratio of 15 also indicates that there’s somewhat limited upside in the near term.

Despite this, the UK property market has performed better than most investors anticipated following the EU referendum. Its future remains uncertain and investors should expect a volatile outlook in the near term. However, in the long run, the two companies offer the potential for high investment returns due to their sound business models and pragmatic strategies.

The post 2 reasons to invest in UK property post-Brexit appeared first on The Twelfth Magpie.

More reading

• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?

Peter Stephens has no position in any shares mentioned. The Motley Fool UK has recommended Hansteen Holdings. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Healthy lettings

Fears for property prices might be growing, but that shouldn’t have any real effect on rental income. And today, Helical (LSE: HLCL) reported an 18% in net rental income for the first six months of the year to £24.6m, and the firm saw its net asset value per share rise by 3% to 471p . That’s way in excess of its share price of 289p, even after a 10% price rise on the day of the results.

Earnings per share fell from 13p to 4.4p, but that happens with the erratic nature of this business, and forecasts suggest a return to March 2016 levels by 2018.

Helical saw the value of its investment properties pick up 4% on a like-for-like basis, with the value of London office properties up 5.3%. That beats the trend shown by others, though it might be skewed a little by Helical’s big recent disposals — this month the firm reported the sale of warehouses to the value of £26m, and of One King Street in Hammersmith for £34.5m.

Chief executive Gerald Kaye spoke of “uncertainty in the UK real estate market and widespread debate as to whether the ‘property cycle’ has peaked or is merely pausing,”  and that’s largely been behind the plunge in the Helical share price after the Brexit vote.

Since 23 June, the price is down 28% even after today’s rise, and it hasn’t seen the same recovery as some other depressed shares in the subsequent months. Does that provide a buying opportunity?

Dividends look set to yield around 3%, and Mr Kaye reckons that “London will continue to be a World City attracting people, businesses and investors.” I think he’s right.

Brexit bargain?

Shares in St Modwen Properties (LSE: SMP) suffered the same Brexit hit. They’ve recovered a little and at 275p stand 18% down since the big day, though since August 2015 we’ve seen a fall of 44%.

For the year to 30 November, analysts are predicting an 80% fall in EPS, which would put the shares on a P/E of 14.5 — the P/E had been falling sharply in previous years ahead of the mooted cyclical downturn. Earnings can be confusing though, with rises and falls in property values included in profits, so asset values and dividends probably make more sense.

Those dividends have been steadily rising and though the yield for this year should be around a low 2.2%, it would still be very well covered and looks safe.

St Modwen’s first-half results released back in July showed a net asset value per share of 421p, which is well ahead of the brownfield developer’s share price, and commercial developments contributed more than half of its property profits in the period.

It’s still way too early to identify the eventual impact of the EU referendum result, and at H1 time chief executive Bill Oliver said “until we have more clarity we believe it is appropriate to take a more cautious approach to the delivery of our development strategy.“

St Modwen could well be a good long-term investment, but we can afford to show the same caution mentioned by Mr Oliver.

The post Helical plc is keeping its head above Brexit’s choppy waters appeared first on The Twelfth Magpie.

More reading

• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?

Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Great first half

One of those is Persimmon (LSE: PSN), whose shares have fallen 35% to 1,370p, and that includes a 4% drop after Tuesday’s first-half trading update was released ahead of results expected on 23 August. The first half seems to have gone swimmingly well, with legal completions up 6% to 7,238 new homes and an average selling price up 6% to £205,000. Total revenues climbed by 12% to £1.49bn.

The company spoke of cheap borrowing, a healthy labour market and strong consumer confidence, and reported an 18% rise in mortgage approvals in the first quarter with April and May continuing the trend.

The big downer, of course, is that EU thing. As Persimmon said, it’s too soon to judge the effect the vote will have. But the company points to long-term unfulfilled demand and says it sees market fundamentals as remaining strong. It believes that its “focus on building traditional family housing in attractive locations … will continue to attract customers in good numbers.” Having spent £305m on new land purchases, Persimmon is being “selective” in its expenditure and any feared weakness in the market will surely lower land prices and provide opportunities for building up land banks for the future.

This is a company that’s conservatively managed, with a strong capital return policy (including £9 per share earmarked for return by 2021), which says it’s “confident in the group’s prospects based upon our long-term strategy.” I can’t see anything here other than an attractive contrarian recovery prospect.

Another one hammered

First-half results from brownfield site developer St. Modwen Properties (LSE: SMP) weren’t enough to protect its shares from another beating, and as I write they’re down 8% on the day to 238p, and down 29% since the referendum.

The results were confused (to this Fool’s mind at least) by the market valuation of the firm’s New Covent Garden Market development being included in profit, with a big rise in its value contributing to £206m in pre-tax profit last year. This year saw its valuation drop by £21m and there was a £13m hit from the increase in Stamp Duty Land Tax, lowering pre-tax profit to just £30m. Having said that, the company reported £34m in trading profit, which was close to last year’s record level of £35m.

None of this compensated for the EU effect, after chief executive Bill Oliver warned of a period of uncertainty following the referendum as we wait to see how the UK property market will respond. He told us that “until we have more clarity we believe it is appropriate to take a more cautious approach to the delivery of our development strategy“.

With St. Modwen shares now on a forward P/E of 11, I’m seeing a possible contrarian buy here too, although I don’t see it as clearly as Persimmon. Commercial property could be seriously hard hit should the UK lose a lot of business now we’re on our way out of the EU, but the housing shortage isn’t going away any time soon. Of these two, Persimmon is my pick.

The post Should you buy St. Modwen Properties plc and Persimmon plc on post-Brexit updates? appeared first on The Twelfth Magpie.

More reading

• Down 63% and yielding 6.3%! Is this FTSE 100 share a brilliant bargain?
• This 5.5%-yielding income stock’s at a 13-year low and cheap to-boot! Time to consider buying?
• Down 65% but yielding 6%! Is this FTSE 100 dividend stock an unmissable bargain?
• A 6.7% forecast yield and 53% below ‘fair value’! 1 stunning FTSE income stock for investors to consider today?
• How much do you need in an ISA to target a £2,066 monthly passive income in 2066

Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.