Why this FTSE 100 stock could be a big winner from the UK Budget

Ken Hall has one industry-leading FTSE 100 stock under the microscope following favourable announcements in last week’s Budget.

| 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.

Red briefcase with the words Budget HM Treasury embossed in gold

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

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.

Last week’s UK Budget was a big one. Chancellor Rachel Reeves announced several reforms that could impact many FTSE 100 stocks.

Tax changes and investment plans were front and centre. That got me thinking about potential Footsie winners and losers.

One industry-leading name in particular stood out to me after watching Chancellor Reeves’ 30 October announcement.

Should you invest £1,000 in Admiral right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Admiral made the list?

See the 6 stocks

Housing reform

Housing is high on the agenda. The government announced it will spend £5bn on housing investment in 2025 and 2026 to increase affordable housing. Plans to hire hundreds of new planning officers to accelerate activity also caught my eye.

This had been fairly well signposted in the lead up to the 30 October Budget. For example, the Labour Party campaign pledged to build 1.5m new homes within five years of being elected.

I have had one Footsie homebuilder in my sights since that election win. I thought it was time to revisit what the UK Budget could mean for its fortunes.

FTSE 100 property developer

Barratt Redrow (LSE: BTRW) is on my radar. Having rebranded from Barratt Developments following its acquisition of rival Redrow for £2.5bn in October 2024, it is in an interesting place.

The Footsie builder is hoping to achieve significant revenue and cost synergies, as well as maintaining a robust balance sheet to help deliver improved shareholder returns moving forward.

Shares in the British group have slipped 19% in 2024 to 444.8p. That’s despite seemingly positive initiatives that would increase demand for property development services.

Created with Highcharts 11.4.3Barratt Redrow PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

The company boasts a £6.5bn market cap but its share price has struggled to climb anywhere near the heights of 750p per share we saw in December 2022.

A cost of living crisis, higher build costs and rising interest rates have all contributed to that. Consumer confidence has been hit and reduced demand while margins have been squeezed.

The critical thing is whether the government can turn its public commitments into reality. If it can deliver the people, materials and regulations required, that could bode well for Barratt moving forward.

Valuation

Shareholders will be hoping for a change in fortunes.

In a recent market update, CEO David Thomas said: “We are beginning to see more stable market conditions with increased mortgage availability and affordability.

That’s a cautiously optimistic message and one shareholders would love to believe.

A lot of these Budget issues were well signposted and are thoroughly priced into the valuation as I write on 5 November. That got me wondering if Barratt is good value at its current share price.

With a forward price-to-earnings (P/E) ratio of 16.6, Barratt looks fairly priced to me. After all, the wider Footsie trades at around 15 times earnings. Barratt’s fortunes, meanwhile, are more tied to the health and cyclicality of the British residential market.

My verdict

The latest Budget should mean good things for the share price. Homebuilding is top of the agenda for the new government and the FTSE 100 group is an industry leader.

I do think Barratt could be one I’ll buy for the long term. However, high mortgage rates, the threat of a recession and potential inflationary pressures mean I won’t be buying right now.

Further selling to drive the price down or realisation of the planned Redrow synergies would give me reasons to take another look at the UK homebuilder.

Should you buy Admiral now?

Don’t make any big decisions yet.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — has revealed 5 Shares for the Future of Energy.

And he believes they could bring spectacular returns over the next decade.

Since the war in Ukraine, nations everywhere are scrambling for energy independence, he says. Meanwhile, they’re hellbent on achieving net zero emissions. No guarantees, but history shows...

When such enormous changes hit a big industry, informed investors can potentially get rich.

So, with his new report, Mark’s aiming to put more investors in this enviable position.

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

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.

Ken Hall has no position in any of the shares mentioned. The Motley Fool UK has recommended Barratt Redrow. 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.

More on Investing Articles

Investing Articles

10% dividend yield! Here’s a FTSE 100 share to consider in April for passive income

This FTSE 100 stock just soared past the 10% yield mark, making it a potentially lucrative option for investors targeting…

Read more »

Young black woman using a mobile phone in a transport facility
Investing Articles

3 FTSE 100 safe haven stocks to consider as trade wars bite

I'm confident in the long-term outlook for the FTSE index of stocks. But these blue chips may protect investors from…

Read more »

Investing Articles

Here’s how Trump tariffs could hand us some top passive income bargains

As tariff terror grips the stock market, it's time for passive income investors to steel our nerves and look for…

Read more »

Investing Articles

These FTSE shares may offer some safety as Trump slaps tariffs on trading partners

FTSE shares moved lower on 3 April, after US President Donald Trump introduced hefty tariffs on its trading partners. These…

Read more »

Investing Articles

6.8% dividend yield! Consider these 2 ‘secret’ passive income stocks to target a £1,360 payday in 2025

Looking for ways to generate above-average dividend income? These lesser-bought income stocks are worth a close look.

Read more »

Elevated view over city of London skyline
Investing Articles

The M&G dividend yields over 10% — and could get higher!

Christopher Ruane explains why he's upbeat about the long-term outlook for the M&G dividend yield and would happily buy the…

Read more »

Young Caucasian man making doubtful face at camera
Investing Articles

2 popular UK growth stocks I wouldn’t touch with a bargepole in today’s market

Buying growth stocks can deliver market-beating returns, but this FTSE 250 pair doesn't look like a convincing investment for our…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing Articles

10 FTSE shares falling today after President Trump’s tariffs bombshell!

Our writer explains why JD Sports Fashion from the FTSE 100 and a diverse bunch of other UK stocks are…

Read more »