skip to Main Content
Get your free newsletter: Actionable insight each morning for self-directed investors. 

Following the immediate aftermath of the Brexit result in June of last year, the Housebuilder sector took a bit of a battering. It has taken time for share prices to recover but the government’s commitment to building more homes has led Analysts to become more positive towards the sector over the last few months.

That’s why I’ve decided to train my focus this week on FTSE 250 Housebuilder, Crest Nicholson Holdings PLC. So why have I chosen Crest Nicholson above a number of, admittedly, very attractive alternatives?

Well, for starters, by calling Crest Nicholson a Housebuilder, I do them a disservice. They offer more than just bricks and mortar. They design and build homes for communities, offering sustainable, environmentally conscious solutions that fit naturally within their surroundings. All the things that a responsible housebuilder should offer.

Coupled with their attractive proposition are some really interesting fundamentals.

Each year over the last five years, the business has built on its previous year’s pre-tax profits, while improving it’s return on capital employed (ROCE). Borrowings are in line with it’s peers while the current ratio (3.60) and interest cover (16.5) suggest Crest is well placed to cover the cost of those borrowings.

As with many of its peers in the sector, the business has a very attractive forward P/E Ratio (7.81) and Price / Earnings Growth or PEG ratio (0.62) that can be attributed to the significant share price weakening post Brexit and the bullish forecasts of Brokers like Peel Hunt, Numis and HSBC, each suggesting healthy pre tax profit growth over the next two years.

The share price has climbed steadily over the last nine months and is now close to its pre-brexit levels. With the government committed to building homes for the UK’s growing population, Crest Nicholson’s strong fundamentals suggest they are well placed to prosper.

Crest Nicholson PLC

Graph source: Hargreaves Lansdown

On top of that, the business offers a really attractive dividend yield which is projected to rise from 4% in 2016 to over 6% in 2017. That means investors have an opportunity to benefit from the positive effects that compounding can bring to an investment, in addition to any capital gains from share price growth. At the time of writing, the share price is 549.50p

I’ll finish with the thoughts of Chief Executive, Stephen Stone, taken from the latest Annual Report (February 2017) – “There will be other challenges to face over the next few years, but I am confident we are well placed to meet them and further strengthen our position in the market.”

So, there’s my case. What do you think?

If you have any thoughts on this or any other featured growth stocks, feel free to visit the Growth Stocks forum and have your say or pop your comments in the discussion area below.

Thanks for reading!

Here’s a list of Growth Stocks previously featured

My thanks as always to JD Financial Publishing for providing access to the Company REFS research tool. They are currently offering a 30-day free trial to this fantastic tool and I would really recommend you take a look.

Become a better investor with SharePad Designed to give you the confidence to pick your own investments, Sharepad gives you access to a wealth of information on UK, US & European stocks. Find out more

Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Michael Morton

Michael Morton

Michael has worked within the Financial Industry for more than 20 years. Starting out as a financial analyst, he has extensive experience working with fund management groups and brokerages.

With an interest in Stocks and Shares, Funds, ETFs and Commodities, his investment focus is medium to long term gains, with the objective of financial security on retirement, and building wealth for his young children for their adult life. His broker of choice is Hargreaves Lansdown.

Stocks in Focus

Here are some of the smaller companies we are following most closely. They all represent significant growth stories in our view. Our in-depth reports go into more detail on why we like them.


A date for your diary

On the 21st of October, Stuart Fieldhouse will be joining Sarah Lowther and Mark Watson-Mitchell to discuss which small cap investments they like the look of and, perhaps, which ones they do not. It promises to be a lively and insightful discussion. If you are interested in investing in small cap stocks then this could be a profitable use of your time. We hope you can make it! Sign up now

Get your free daily newsletter: 

Thanks to our Partners

Our partners are established, regulated businesses and we are grateful for their support.

FP Markets
Trade Nation
Back To Top