£1,000 invested in Persimmon shares before the UK election is worth this much now

The last few months have been a wild ride for Persimmon shares. Here’s how our Foolish writer sees the state of the shares now.

| 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.

photo of Union Jack flags bunting in local street party

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.

Housebuilders depend a lot on government policy and regulation. This was evident throughout the 2010s when homeowning was heavily promoted with schemes like Help to Buy and the sector went on a tear. None more so, perhaps, than Persimmon (LSE: PSN) shares, which went up around 20 times in value in less than a decade. 

The times

While the shares have stagnated since – thanks to supply cost inflation, costlier mortgages and a cost-of-living crisis – the times they are a-changing. A new government came to power. They want to “build, build, build”. The promise was housebuilding levels more reminiscent of when Bob Dylan still played acoustic! The mooted 300k new homes a year would be a 50% increase on current levels. If that target is to be reached, the private sector must be involved. 

So how have Persimmon shares reacted to the news? Well, initially at least, very well. The shares jumped 28% from the date of the election to October, a strong sign of optimism around the company. Then came the Budget and the price dropped 28%, near where it languishes now. The budget was hardly a boon to Persimmon. Rather it wiped out over £1bn of its market value!

Should you invest £1,000 in Synthomer Plc 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 Synthomer Plc made the list?

See the 6 stocks

So it went up and down by the same amount in percentage terms? Annoying for us Persimmon shareholders, isn’t it? Well, it’s even worse than that! The 28% increase was on a smaller stake than the 28% decrease. So Persimmon shares are worth even less now. A £1,000 stake before the election is worth close to £922 now. 

Created with Highcharts 11.4.3Persimmon Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

What’s the core of the problem? CEO Dean Finch says he’s looking at a “period of squeeze”. He said that negotiations with suppliers have already hinted at more inflation. The primary causes are likely an increase in the minimum wage and employer’s NI across the supply chain. Those tax hikes will have an effect on Persimmon’s margins directly too, of course. 

Am I selling?

There’s a triple whammy here too, and it comes in the way of more stringent regulation. From next year, all new-build houses are having to move away from using gas boilers as part of Net Zero targets to eliminate them completely by 2035. That means builders will be choosing more costly alternatives. It might even mean fewer building completions if certain projects turn out to be unprofitable. 

It’s not all bad though. The firm delivered a positive trading update with increases on a raft of metrics. Visitor enquiries and other ‘soft’ metrics remained strong too, a good sign of positive momentum and the direction of where sales will be headed for the next few years. While it hasn’t been a particularly terrific few months for Persimmon, I don’t need to think twice about what I’m doing with my shares. It’s not a Sell for me.

Should you invest £1,000 in Synthomer Plc 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 Synthomer Plc made the list?

See the 6 stocks

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.

John Fieldsend has positions in Persimmon Plc. 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.

Pound coins for sale — 51 pence?

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

More on Investing Articles

Investing Articles

£20K invested in Tesla stock last April is now worth…

Despite all the bad headlines lately, Tesla stock has put in a storming performance over a 12-month timeframe. Is this…

Read more »

Investing Articles

If a 40 year old invests £600 a month in a SIPP, here’s what they could have by retirement

With no retirement savings at 40, an investor could put £600 a month into a SIPP and grow its value…

Read more »

Stack of British pound coins falling on list of share prices
Investing Articles

Why hasn’t its 9.9% yield boosted the Phoenix share price?

Phoenix Group has a dividend close to double digits, but saw a weak share price performance in recent years. Christopher…

Read more »

Silhouette of a bull standing on top of a landscape with the sun setting behind it
Investing Articles

With average 10% yields, these mid-cap FTSE shares could supercharge a passive income portfolio

Some of the best passive income gems can be found on the UK's smaller indexes like the FTSE 250 and…

Read more »

A coin being dropped into a piggy bank
Investing Articles

As the Barclays share price tanks 19% in 2 days, is this a great buying opportunity?

As a trade war sends the Barclays share price into a tailspin, Andrew Mackie steps back to look at the…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

Is Fundsmith Equity still a good choice for a Stocks and Shares ISA in 2025?

Many Britons hold the Fundsmith Equity fund in their Stocks and Shares ISAs. Is this still a good move? Edward…

Read more »

Investing Articles

Nvidia stock is down 24% this year. Time to buy the dip?

Christopher Ruane has been eyeing Nvidia stock as a potential addition to his portfolio for a while. Is a recent…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Down 25% since January, this resilient dividend stock’s catching my eye

Maintaining the UK’s rail, water, and energy infrastructure isn’t the most exciting business. But it has made this a solid…

Read more »