The Motley Fool

One ‘hot property’ growth stock I’d buy and one falling knife I’d sell

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.

Shares in Countryside Properties (LSE: CSP) are pushing higher today after the company issued an impressive set of results for the half year ending 31 March 2017. For the period the homebuilder reported 1,437 completions (including partnership completions), up 31% year-on-year, generating revenue of £435.4m, up 39% year-on-year adjusted. Operating profit rose 39% to £70.4m, and adjusted basic earnings per share grew 128% to 11.4p. Return on capital employed increased 260 basis points to 25.7%.

Alongside this robust set of results for the first half, Countryside’s management also provided an upbeat outlook for the rest of the company’s financial year. Management now expects results to be ahead of market expectations for the year thanks to a “sharp increase in completions which looks set to continue in the second half.” The company is entering H2 with a “record private forward order book.”

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!

Undervalued?

Current City forecasts are projecting earnings per share of 25.6p for the financial year ending 30 September, but after today’s update, it looks as if these figures are set to be revised substantially higher. And with this being the case, even though shares in the group have risen by 18.7% year-to-date, there could be further gains on the cards. Indeed, if the company outperforms City forecasts the shares will be trading at a low teens forward earnings multiple, which looks cheap compared to Countryside’s earnings growth. The shares also support a dividend yield of 2.8% covered three-and-a-half times by earnings per share, leaving plenty of room for further growth.

This is certainly one hot property stock I’d keep my eye on.

Overvalued

On the other hand, I would avoid estate agent Foxtons (LSE: FOXT) as the company struggles to maintain its composure in London’s creaking property market.

After a tough 2016 in which profits fell by more than 50%, this morning the company has reported a 25% decline in revenue year-on-year. A slowing property market seems to be entirely to blame for this decline with property sales commissions falling from £20m to £11.1m for the period. What used to be described as relatively stable lettings revenues also fell by £300,000 to £15.5m.

City analysts are expecting it to report full-year pre-tax profits of just under £14m on revenue of £124m, which can only be described as a relatively dismal performance for the group. For some perspective, during 2014 it generated a pre-tax profit of £42m. So, over the past three years, pre-tax profit has fallen by more than two-thirds.

With this being the case, it is surprising that shares in Foxtons currently trade at a forward P/E of 26, an extremely demanding valuation more suited to a high-growth tech company than struggling London estate agent.

Put simply, considering the premium valuation and falling earnings, coupled with the group’s cloudy outlook it’s difficult to get excited about the shares. Compared to Countryside, Foxtons looks to be a poor investment.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

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.