3 Plays On The Buy-To-Let Boom: LSL Property Services plc, Rightmove Plc & Countrywide PLC

LSL Property Services plc (LON: LSL), Rightmove Plc (LON: RMV) and Countrywide PLC (LON: CWD) are three plays on the UK’s booming buy-to-let market.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Some 32% of ages 45 to 64 with a pension are considering using it for a buy-to-let property. With this in mind, when the pension changes come into force in April of this year, there could be a rush on buy-to-let property. 

Two pure-plays on the buy-to-let market are Belvoir Lettings and M Winkworth, although these two companies are micro-caps with market values of less than £35m so they may be unsuitable for some investors. 

The industry’s larger players could be better picks. 

Biggest is best

National property group Countrywide (LSE: CWD) is one of the largest players in the UK’s booming property market and buy-to-let business. 

Countrywide has a national presence and offers services covering the whole property market, from estate agent and mortgage provider to lettings agent. 

And with all bases covered, Countrywide can profit whether the property market is going up or down. The letting business gives a stable, predictable flow of income. 

The company reported strong demand from buy-to-let landlords during 2014, reporting a year-on-year rise of 25% in the number of residential properties under management. 

Pre-tax profit is set to nearly triple this year to £103m, and Countrywide currently trades at a forward 2015 P/E of 12.8. The group supports a dividend yield of 4.4%. 

With its diversified operations, Countrywide is a great play large-cap play on the buy-to-let sector.  

One-stop-shop

A better pick for small-cap investors could be LSL Property Services (LSE: LSL), a one-stop shop for property and related services. The company conducts the sale of residential property, provides lettings services, surveying, mortgage advice and services to mortgage lenders, including valuations, asset management and property management.

In September of last year, the group signed a new contract with Lloyds Banking Group to provide surveying and valuation services for one of the UK’s largest mortgage lenders. Group income from lettings income expanded at an annual rate of 26% for the 10-month period ended 31 October 2014.

Unfortunately, LSL did issue a profit warning last year as deteriorating housing market conditions slowed growth. Nevertheless, at present the company only trades at a forward P/E of 10.4. 

Cash is king 

Lastly, the UK’s number one property website, Rightmove (LSE: RMV).

Even though Rightmove isn’t technically in the buy-to-let business, the company is set to benefit from an increasing level of activity in the property sector.

Last year Rightmove was one of the UK’s most visited websites. What’s more, the great thing about a business like Rightmove’s is the fact that the company has very low overhead costs, but generates large amounts of cash. During 2013 Rightmove generated £83m in cash from operations, but capital spending only amounted to £1m.

Still, you have to pay a premium for this kind of quality. The company currently trades at a forward P/E of 27.5 and a 2015 P/E of 24.3.

Current City forecasts expect Rightmove’s pre-tax profit to jump 14% this year, followed by growth of 13% to £129m during 2015.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has recommended Rightmove. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

2 reasons why I’m loading up on FTSE 100 shares

This Fool thinks FTSE 100 shares look cheap. With that, he plans to continue snapping them up today. Here's one…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Why wait? I’d buy FTSE 100 shares now before the next stock market rally!

Our writer explains why he'd snap up what he sees as bargain FTSE 100 shares now rather than waiting in…

Read more »

Investing Articles

Is it time for me to change my tune about Rolls-Royce shares?

This Fool has steered clear of buying Rolls-Royce shares. But after its recent performance, he's reconsidering his stance. Here's why.

Read more »

Investing Articles

Aviva share price: 3 reasons to consider buying for 2024

The Aviva share price is still lower then when I bought some nearly a decade ago. Here's why I'm thinking…

Read more »

Front view photo of a woman using digital tablet in London
Investing Articles

These 2 shares could bank me £328 a month in second income

Jon Smith runs through two FTSE stocks that have above-average dividend yields that could pay out a generous second income…

Read more »

Stack of one pound coins falling over
Investing Articles

This passive income plan is simple – but could earn me thousands!

Christopher Ruane explains how putting a fiver a day to work in the stock market might help him earn thousands…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Charticle

After record profits, are Lloyds shares a buy, sell, or hold?

As Lloyds pulls in pre-tax profits of £7.5bn, boosts its dividend, and continues to repurchase shares, are the company’s shares…

Read more »

Investing Articles

NatWest shares: is a once-in-a-lifetime opportunity on the way?

Should investors get ready for a unique opportunity as the UK government plans to sell off its NatWest shares later…

Read more »