The Motley Fool

These 2 bargain growth stocks are great plays on the UK housing boom

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.

The UK homebuilding market is booming, and investors are trying to get in on the action from every angle. Unfortunately, this rush to profit has sent valuations across the sector sky-rocketing, leaving slim pickings for those investors who want to buy cheap stocks. 

However, auxiliary homebuilding stocks, such as component suppliers may still prove to be good investments, and I believe I have found two such stocks that fly under the radars of most investors.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Hiding from the rest of the market

Abbey (LSE: ABBY) is a property development, plant hire and property rental firm operating in Ireland, the UK, and the Czech Republic. With a market value of £256m, the firm is certainly not small, but it does fly under the radar of most investors. 

Over the past four trading days, only 1,252 shares in the company have changed hands, that’s an average of 313 per day. The long-term average is close to 150 shares per day.

Still, even though Abbey is hidden away in a corner of the market it doesn’t mean that the company is not successful. Over the past five years, pre-tax profits have grown from £12m to £61.5m and earnings per share have increased nearly 500%. Analysts expect the company’s growth to slow over the next two years with earnings per share falling to a low of 126p for the fiscal year ending 30 April 2018, before rebounding to 136p for the following year. 

Still, even based on these estimates, shares in Abbey look relatively cheap. At the time of writing shares in the group are trading at 1,269p, for a cyclical low P/E of 10.1. Looking to 2019, the shares are trading at a forward P/E of 9.3 making them one of the cheapest in the homebuilding sector. Over the past five years, shares in Abbey have returned 170% and it looks as if these gains are set to continue.

Undervalued growth 

As well as Abbey, PVC windows and doors manufacturer Eurocell (LSE: ECEL) also looks to be a cheap play on the UK’s booming housing market. 

Like Abbey, Eurocell has grown rapidly over the past three years but the market has failed to recognise this growth. Earnings per share have nearly doubled since 2014 and City analysts are forecasting 10% earnings per share growth for the year ending 31 December 2017, followed by 8% growth for 2018. Despite these steady growth forecasts, shares in Eurocell are currently trading at a forward P/E of 12, falling to 11.2 for 2018. 

And unlike Abbey, which only offers shareholders a dividend yield of around 1%, shares in Eurocell currently yield 3.5% and the payout is covered twice by earnings per share. What’s more, management has a record of hiking the company’s dividend by around 1p per year and based on historical growth, the payout is set to hit 10.2p for 2018, giving a yield of 3.9%.

One Killer Stock For The Cybersecurity Surge

Cybersecurity is surging, with experts predicting that the cybersecurity market will reach US$366 billion by 2028more than double what it is today!

And with that kind of growth, this North American company stands to be the biggest winner.

Because their patented “self-repairing” technology is changing the cybersecurity landscape as we know it…

We think it has the potential to become the next famous tech success story.

In fact, we think it could become as big… or even BIGGER than Shopify.

Click here to see how you can uncover the name of this North American stock that’s taking over Silicon Valley, one device at a time…

Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.