Britain’s population is ageing, and rapidly. It’s a trend that Target Healthcare REIT is capitalising on.
This ‘nearly’ penny stock (which trades around 115p) owns and operates an estate of care homes. This part of the property market is massively undersupplied, and so rent levels at such facilities are moving continuously higher.
Target saw rents at homes that were subject to rent reviews rise 1.8% year-on-year on average in the 12 months to June. So its no wonder the business embarked on another £125m share placing and raised its debt capacity to continue building its property portfolio. I’d buy Target despite the threat posed by shortages of care home workers following Brexit.
A packaging powerhouse
Getting a slice of the e-commerce boom is a key investment strategy of mine. I’m thinking of improving my exposure to this retail revolution by buying shares in Macfarlane Group too. This particular cheap UK share makes the majority of its revenues by making protective packaging products. It sources the remainder from supplying custom-made boxes and designing and printing labels.
Macfarlane is one of the country’s leading operators in providing packaging products. This puts it in great shape to exploit what is Europe’s largest e-commerce market, one that continues to grow at a steady pace. I’d buy Macfarlane shares despite the disruption an economic downturn could cause to its operations. Today, the business trades at 137p per share.
Riding the construction boom
Strong housebuilding activity on these shores makes London’s listed brickmakers attractive buys, in my opinion. I already own shares in Ibstock and I’m considering buying Michelmersh Brick Holdings for my portfolio as well.
In its late November trading update, this particular operator (which changes hands at 128p) said that “we continue to see strong demand in our end markets from new housing” as well as from commercial regeneration projects and the repair, maintenance and improvement (RMI) market.
House construction looks set to remain elevated too, in order to meet demand that’s being supercharged by low interest rates and Help to Buy support for first-time buyers. I think Michelmersh is a great cheap UK share to own, despite the rising problem of worsening cost inflation.
Another penny stock I’d buy today
Speaking of top construction-related stocks, engineering services provider Nexus Infrastructure is also on my shortlist right now. This business designs, installs and hooks up essential infrastructure on new housing developments to keep residents supplied with gas, water, broadband and the like. And it’s doing a roaring trade at the moment thanks to strong build rates, with revenues rising 10% in the year to September.
Demand for Nexus’ services could wane if the Bank of England steadily raises interest rates and home-buy affordability takes a hit. A high-profile failure of its engineering products could also hit future business hard.
That said, I still think this UK share (which trades at 228p) looks attractive from a risk-reward perspective.