Taylor Wimpey is one of those stocks that lends itself well to day trading. Its price trend over the course of the year is not particularly clear so it doesn’t make for an easy long term bet.
What works in its favour as a short trade is there is a lot of daily volume in the stock – in terms of volume it is frequently among the top ten companies traded on the FTSE each day alongside banks, Glencore and Centrica – and the daily moves are big enough to be interesting.
Taylor Wimpey shares: price is driven by housing data
For instance this morning the share is down 4.92% to 191.32 mainly because of fresh data from Nationwide showed that UK house prices increased less than expected, up 2.4% on the year in May.
While this is not particularly good news for the house builder it creates an interesting trading opportunity particularly if you contrast it with one of its FTSE 100 peers, Barratts Developments, where shares slipped 0.4% on the day.
Having kept an eye on Taylor Wimpey shares for a while it is to be expected that the move will be reversed within the next one or two trading days – barring any unexpected company news. Judging by the company’s financial data and recent announcements, Taylor Wimpey shares look fundamentally in a good shape and unless the UK housing market completely collapses over the coming months (keep an eye on the Mark Carney and the Bank of England’s interest rate decision) there is no reason for Taylor Wimpey shares not to quickly to bounce back.
UK housing data calendar will keep traders busy
So what to look out for? The calendar for UK housing data is fairly busy which creates numerous triggers for price moves.
The Nationwide House Price Index is typically released at 7 am on the last day of each month and provides information on monthly and annual trends in the UK housing market. Coming up in June, the Purchasing Manufacturers’ Index for construction will be published on 4th of the month at 9.30am followed by the Halifax House Price Index on the 6th at 8.30am. The Rightmove House Price index is released at 9.30am on the third Monday of each month. And so the monthly data merry-go-round goes. The company’s half year results will be published at the end of July and its next trading update is due on 13 November.
Separately, at its last Capital Markets day Taylor Wimpey said it plans to increase its return on net operating assets to 35%, maintain its operating profit margins at between 21% and 22% and to increase its ordinary dividend to approximately 7.5% of group net assets from the current 5% over the next five years. All the more reason to keep an eye on this stock.