It’s been a pretty tumultuous ride on the FTSE 100 in 2015 and the sizes of the biggest rises and falls show just what an unusual year it has been. The index itself had reached 6,274 points by close on 30 December, a fall of 3.6%. But the biggest winner among its constituents has managed a gain of 51.4% since the year started.
As I write, there are only three FTSE 100 stocks with a 50% gain this year, but that big winner is housebuilder Taylor Wimpey (LSE: TW). Its share price has more than six-bagged to 204p over the past five years. That’s pretty much in line with the whole sector, with Persimmon up nearly fivefold and Barratt Developments managing a seven-bagger in the same period. Taylor Wimpey’s third-quarter trading update told us the firm saw “an excellent summer selling season strengthen further in the autumn period,” and spoke of “a healthy outlook for both homebuyers and homebuilders“.
That’s borne out by the last few years of earnings growth that have seen EPS grow from 2.1p in 2011 (after a 1.5p loss recorded in 2010) to a whopping 11.2p per share in 2014. And we have further rises, to 14.8p and 17p, forecast for 2015 and 2016. On top of that, the dividend has come storming back and there’s a 4.9% yield on the cards this year followed by 5.5% next.
And with a P/E of 14, dropping to 12 on 2016 forecasts, I’d say Taylor Wimpey shares are still cheap!
Investment rebound
We turn to the investment world next with Hargreaves Lansdown (LSE: HL), the investment manager whose shares have climbed 51.2% in 2015 to reach 1,508p. Over five years we’re looking at a 160% gain – not up to housebuilder standards, but still very impressive.
The firm’s recent rapid earnings growth fell off a bit in the year to June 2015 with a 3% fall in diluted earnings per share. But there’s growth of 18% forecast for the current year. October’s first-quarter update supported that, with a 47% increase in net new business inflows over Q1 last year to reach £1.43bn. And net revenue was up 11% to £78.5m.
But the trouble now is that the soaring share price has pumped up the P/E multiple to a very testing 39 based on current forecasts, and that’s with only a 2.5% dividend yield on the cards. It’s a great company, but the shares are surely too high now.
Back to houses
In third place we’re back to housing with property developer Berkeley Group Holdings (LSE: BKG) and a 2015 price gain of 50.6% to 3,706p. At the interim stage reported in early December, the firm told us it’s “on track to deliver pre-tax profits of £2.0 billion in aggregate over three years to 30 April 2018,” with net cash on the books of £263m and adjusted pre-tax profit for the period up 10% to £242m.
EPS is forecast to drop a little, by 5%, for the year ending April 2016, but a 51% rise predicted for the following year would drop the P/E as low as 10. With dividends expected to yield 4.3%, Berkeley might even be better value than Taylor Wimpey!