Today I’ll be taking a closer look at British housebuilder Taylor Wimpey, online fashion giant ASOS, and property investment firm British Land. There are plenty of reasons to have these three companies on your watch list, but is it the right time to take the plunge and invest?
Housebuilder oversold?
UK-based housebuilder Taylor Wimpey (LSE: TW) has seen its shares plunge from pre-Brexit highs of 210p to depths of around 115p since the referendum, although an absurd amount of volatility means they’ve since reclaimed some of the lost ground. It seems the market has yet to decide whether housebuilders are doomed, or whether the post-Brexit panic has left the sector trading at a bargain price. Personally I’m of the latter persuasion as the nation’s housing shortage is unlikely to be resolved any time soon.
The FTSE 100-listed property developer is expected to post a 14% rise in earnings this year, with just a small 2% decline pencilled-in for 2017. At current levels the shares trade on an undemanding nine times forecast earnings for fiscal 2017, and support a dividend yield approaching a mouth-watering 10%. I think this is a fantastic opportunity for brave investors confident of a long-term recovery in the out-of-favour property sector.
Shares in vogue, but at a price
Online fashion retailer ASOS (LSE: ASC) released a very positive trading statement this week with revenues for the four months to the end of June up by an impressive 30% to £515m. The company also boasted a 24% year-on-year increase in the number of active customers to 12m. The online retailer says it now expects sales growth for the full year to August to be nearer the top end of its 20% to 25% target range. Shares in the AIM-listed retailer have performed well in recent weeks and continued to surge after the update.
Analysts are expecting strong growth to continue, but unfortunately the optimism leaves the shares trading on a premium valuation, with a forward price-to-earnings ratio of 78 for this year, falling to a still-hefty 60 for fiscal 2017. The shares look far too expensive to me and could tumble sharply if earnings fall short of expectations. I’d wait for some weakness in the share price and hence a less risky entry point.
The Cheesegrater is full
Property development and investment firm British Land (LSE: BLND) announced this week that the Leadenhall Building in the City has now been fully let. The company said it had secured agreements covering the remaining space in the building known as The Cheesegrater with three existing clients. Significantly, two of the three transactions were agreed following the EU referendum, hopefully restoring some investor confidence.
No doubt the uncertainty created by the UK’s decision to leave the EU will weigh on the shares in the short-to-medium term, but the prospective 5% dividend yield should provide solace for long-term investors.