I believe that grabbing a slice of the housebuilding sector is a great way to make big investment returns. It’s why I own Barratt Developments and Taylor Wimpey shares along with a stake in brickmaker Ibstock.
And I’d be happy to snap up penny stock Cairn Homes (LSE: CRN) as the housing market in Ireland, just like in the UK, is suffering from severe property shortages that are sending newbuild prices through the roof.
Cairn Homes said in July’s most recent update that “demand for new homes has never been stronger and the lack of supply has never been more acute.” This explains why the penny stock’s closed and forward pipeline rose to 1,530 units as of June, up 65% in just four months.
I’m expecting another positive trading statement when half-year results come out on 9 September, given the steady slew of encouraging news on the Irish housing market.
City brokers think Cairn Homes’ annual earnings will double in 2021. This leaves the company trading on a rock-bottom price-to-earnings growth (PEG) ratio of 0.3 at current prices of 95p. This makes it too cheap for me to miss, in my view, despite the threat posed by soaring building materials prices.
The FTSE 100 fashion star
I believe JD Sports Fashion (LSE: JD) could be a top FTSE 100 stock for me to buy before its next financials come out on 14 September.
The retailer’s results have remained mightily impressive recently as the growth of flexible working has turbocharged the already-impressive rise of the athleisure clothing segment. The strength of JD Sports’ online proposition has also helped the Footsie firm’s profits remain solid, despite the closure of its stores during Covid-19 lockdowns.
I’m also encouraged by the FTSE 100 firm’s expansion into foreign territories and, in particular, its push into the US.
Analysts think JD Sports’ earnings will rise by 20% and 17% in the fiscal years to January 2022 and 2023 respectively. But be aware that the UK retail share trades on a high forward P/E ratio of around 24 times. This leaves it in danger of a share price correction if news flow surrounding the company disappoints.
Another great penny stock
I also believe Safestyle UK (LSE: SFE) could be a top UK penny stock to buy before next month. Recent trading at the window and door supplier has been extremely strong. And I expect another excellent market update on 23 September. Safestyle upgraded its profits expectations at its last investor announcement a few weeks ago.
It’s true that supply chain issues could hit Safestyle’s sales in the months ahead. Still, I believe the outlook for this penny stock over the longer term remains robust. The home improvement market remains solid as broader consumer spending steadily improves. And, as I said earlier, the housing market in the UK is extremely bubbly right now.
So Safestyle could continue to benefit from solid spending on pre- and post-sale renovations. Today, this UK share trades at 54p.
Royston Wild owns shares of Barratt Developments, Ibstock, and Taylor Wimpey. The Motley Fool UK has recommended Ibstock. 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.