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Authoritative Independent Monthly Share Selections Using Technical & Fundamental Analysis

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House builders looking over-sold

November 2020

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

At a time when there’s a resurgence in Covid-19 rates it might seem odd to feature house builders, which alongside retail, leisure and travel, are at the “risk on” end of the spectrum. However, most of the threat is arguably in the price with many house builders trading at low PEs and significant discounts to NAV (net asset value) while director buying (the most bullish signal) is also becoming more prevalent.A new note from Jefferies states that local lockdowns, like the one in Leicester, have not impacted construction build-outs on site; mortgage demand is ahead of levels lenders can process; and house price inflation is 3-5%, driven by pent up demand, the stamp duty cut and Help to Buy, which ends next spring b ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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