Share price woes

There are plenty of reasons why the BT share price has plummeted. The company has net debt of £18bn and pension liabilities of £50bn. The interest payment on the pension deficit alone is over £700m a year.

The roll out of Britain’s 5G network was meant to be an excellent opportunity to revive the companies fortunes. However, the government restrictions on the use of Huawei products will cost the company £500m.

Despite its huge debt, the company is still obligated to find an estimated £12bn to upgrade the nation’s fibre network by the end of the decade.

The share price reached its lowest point when it was announced the dividend payment was being cancelled until 2021–22.

There are positives

The jewel in the crown is Openreach. This is the fixed network arm of BT and is responsible for maintaining the UK’s telephone and broadband infrastructure. The division is highly profitable and has a virtual monopoly in its sector.

The performance of mobile phone network EE has been a positive. Implementing cross-business synergies since its acquisition has largely contributed to its success. 

Revenues at BT Sport predictably suffered due to the cancellation of live sport in the spring. However, the recommencement of Premier League football and other sports provides a unique television offering. This guarantees regular revenues from monthly subscriptions.

Implementing cost cutting measures is essential to help fund the Openreach infrastructure improvement programme. The company aims to reduce operating costs by around £1bn each year by 2023, rising to £2bn each year from 2025. The decision to cancel the dividend until 2021–22 will help. 

If BT can reduce its debt burden and re-invest the proceeds successfully, there is no reason why the share price will not rise in the long term. 

Share price recovery?

The share price fall values BT at just £10bn. The price is so low the company is on alert for potential takeover approaches. Investors have reacted positively to this news, which has led to a mini-share price bounce this week. Openreach is the main attraction for any party contemplating a takeover bid. It is currently valued at twice the price of the parent company.

Any potential takeover will be very difficult to facilitate. It is a highly regulated business and new owners will have to guarantee the security of the pension liabilities. The future of BT is not just a business issue, but a very politically sensitive issue.

It seems to me that for every pound BT saves, it needs a further two pounds. One pound to invest in capital investment programmes and one to reduce its debt pile. I think this cycle isn’t going to end any time soon and do not foresee a sustained share price recovery.

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Ben Race owns shares in BT. 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.

FTSE 100 dividend cull

Some 42% of total dividend payouts from stocks within the FTSE 100 have been cut or cancelled this year. The remaining payers tend to be non-cyclical business whose revenues aren’t so dependent on the strength of the economy.

Painfully for investors, 73 of the FTSE 100 stocks are worth less than they were six months ago. The value of the index has fallen about 19% since the start of the year. 

However, if you choose wisely there are great opportunities to buy dividend-paying stocks at undervalued prices. As an added bonus, as the share prices are lower, the respective dividend yields of these companies are now higher. 

What to look for

I think a company’s dividend payments should be covered by its earnings by a ratio of at least 1.4. If the dividend cover is less than one, then it is at risk of being cut or suspended if the company encounters trading difficulties.

Like Warren Buffett, I like to invest in companies that have a wide ‘economic moat’. This refers to a business’s ability to maintain a long-term competitive advantage over its rivals. This is important as I invest for the long-term and prefer to leave my dividend payments to compound over time.

The current economic turmoil has highlighted the perils of investing in cyclical stocks, such as banks and oil producers. I prefer to invest in non-cyclical stocks. These companies’ earnings are less affected by the strength of the economy. The more globally diverse these companies are, the better.

The chosen two 

1. GlaxoSmithKline is a global healthcare behemoth that produces medicines, vaccines and consumer healthcare products. Patents for its medicines and vaccines give the company a wide economic moat. Brand loyalty ensures demand for its consumer healthcare products remains high. Its dividend yield is in excess of 5%. This is well above the FTSE 100 average of just under 4%. The dividend cover is 1.4 times the company’s earnings. It is also one of the few companies in the FTSE 100 that pays its dividends quarterly. This is a bonus for investors who rely on regular payments to fund their living expenses.

2. BAE Systems produces heavy duty military equipment, including fighter jets and aircraft carriers for national governments, as well as cyber security products. The sensitive nature of these works ensures its economic moat is wide. Contracts to provide this equipment are enormous in value and long in duration, which is excellent for investors as it provides long-term visibility of future revenues and profits. The current dividend yield is just above 4.3%. The dividend cover is 1.9 times the company’s earnings.

The share prices of both these stocks are less than they were a year ago. I believe both will recover their lost value in the near future and grow their dividend payments. Investors in these stocks should therefore benefit from capital growth as well as growing income — the perfect recipe for getting rich and retiring early.

The post 2 FTSE 100 stocks I think could help you get rich and retire early appeared first on The Motley Fool UK.

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The author owns shares in GlaxoSmithKline and BAE Systems. The Motley Fool UK has recommended GlaxoSmithKline. 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.

Pricing power

Diageo is the fifth biggest company in the FTSE 100. It is famous for popular drinks brands, such as Johnnie Walker, Guinness, Smirnoff, Baileys and Captain Morgan. Regardless of the state of the economy, consumers will still purchase their favourite tipple.

Consumer brand loyalty enables Diageo to charge a premium for its products without affecting sales. This pricing power contributes towards its impressive profit margins. This year, organic operating profit before exceptional items was just under 20%. This is impressive considering the trading challenges it has had to overcome. Prior to this year, pre-tax profits were up 40% since 2006.

Large share price falls are rare for a company with such an established track record of increasing profits. This is why I believe this could be the perfect time to invest.

Diversity

While pubs and restaurant chains have been closed in the UK, the FTSE 100 drinks giant has benefited from an increase in drinking at home. Supermarket sales of alcohol shot up by two thirds in preparation for lockdown. But revenues will begin to return to normal now the pubs and service industry has re-opened.

Beyond the UK, DGE products are enjoyed around the globe. Prior to lockdown, revenues had risen in North America and Europe. And long term the company is well positioned to benefit from the growing middle classes in China and India. I do not think the depressed share price reflects this vast potential and this could be an excellent opportunity to invest.

Income champion

Companies in the FTSE 100 have been quick to suspend or cancel this year’s dividend payments in response to the coronavirus. However, Diageo has continued its commitment to paying a dividend despite these challenges. This maintains a dividend growth record that goes back to 1990. Free cash flow of circa £1.6bn is more than sufficient to sustain the dividend payment at its current level.

Despite its impressive dividend growth record, Diageo has had a relatively low dividend yield of 2% in the past few year. However, due to the depressed share price, this yield has risen to nearly 3%. As an income investor I have previously not invested in Diageo due to its low yield. However, the enhanced yield is enticing and this could be the perfect time to invest for income seekers.

Fund manager’s favourite

It would appear my enthusiasm to invest in Diageo is shared by star fund manager Nick Train. Despite the falling share price, it became the top holding in his UK Investment fund in July. This implies that he sees that falling share price as an opportunity to top-up his holding and not a reason to be fearful.

Diageo is a permanent fixture on my watchlist. Global diversity, strong brands, good profit margins and secure dividends are exactly what I look for when I invest in a company. I think the current depressed share price is an excellent opportunity to invest.

The post Is this the perfect time to invest in this FTSE 100 drinks giant? appeared first on The Motley Fool UK.

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The author has no position in Diageo. The Motley Fool UK has recommended Diageo. 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.

Share price rise

On 12 March the Reckitt Benckiser share price was 5,150p. This was a multi-year low as the price plummeted with the rest of the FTSE 100 due to the potential impact of the coronavirus. Since this time the share price has soared more than 50% to approximately 7,900p. In the same time, the FTSE 100 has only recovered about 17% of its value.

This share price rise has been supported by impressive half-year results. Both revenues and profits have risen as consumers increased their spending on hygiene and health products. Operating profit in the first half of the year was an impressive 20%.

Increased demand

Hygiene products are responsible for 40% of Reckitt Benckiser’s revenue. Within this sector demand for the popular disinfect brand Dettol grew approximately 62%. I think the coronavirus has changed our attitude towards hygiene. I foresee a long-term increase in demand for its products.

The remaining business focuses on health products. Panic buying of its popular products, such as Nurofen and Gaviscon, contributed towards growth in this sector. Spending on health products increases in the winter months, so its revenue in the second half of the year should be strong.

Both parts of the business are growing. I see no reason why the share price rise shouldn’t continue.

Pricing power

I am a big fan of consumer goods companies. Regardless of the strength of the economy, consumers will purchase their favourite branded products. This loyalty means consumers are happy to pay a premium to own them.

Reckitt Benckiser’s brands are very mature and growing revenue to increase shareholder returns has previously been challenging. In the past, revenues have been boosted by company acquisition rather than growth. However, this isn’t always successful and can take a long time to pay off. The acquisition of baby formula specialist Mead Johnson is a perfect example of this.

The current forecast for the financial year is to achieve high single-digit growth. However, I believe double-digit growth is more than achievable due to the high demand for its hygiene products in particular. Exceeding these targets will ensure its share price rises further.

Good value

A popular metric to assess the value of a business is to use the price-to-earnings ratio. The current forward price-to-earnings ratio of Reckitt Benckiser is about 24. This is well above the FTSE 100 average of 14. However, I am not concerned. Growing companies have a higher ratio as investors drive up the share price, believing it will make more profit in the future. 

I believe the Reckitt Benckiser is fairly valued. Its established brands, range of products and pricing power should ensure growth is sustainable and profitable. Health and hygiene is a growing market and the company are well placed to benefit. In conclusion, I see no reason why the share price should not continue to rise.

The post Reckitt Benckiser share price rises 50%: I think there’s more to come appeared first on The Motley Fool UK.

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The author does not own shares in Reckitt Benckiser. 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.

If you are looking to buy a house in the UK, it is more than likely the first place you will look is Rightmove (LSE:RMV). The company has more than an 80% share in the property portal sector according to its annual report. The Chancellor recently announced a stamp duty holiday to help boost the housing market. Surely this can only be good news for the Rightmove share price?

Rightmove share price

The Rightmove share price has fallen more than 15% since the start of the calendar year. However, the share price has been more resilient than most in the FTSE 100, which has lost nearly 19% of its value. This resilience is due to its dominant market share and excellent balance sheet. 

Rightmove is one of the most profitable companies in the FTSE 100. Its underlying operating profit is a whopping 75% according to its annual report. Nearly 70% of this profit was returned to shareholders via dividends or share buy backs last year.

Revenue slump

Rightmove’s revenues are generated by charging estate agents to access its property portal. The housing market was forced to close for seven weeks due to the coronavirus. In response, Rightmove discounted its fees by 75% between April and July to help support estate agents. Further discounts will be in effect until September.

To help preserve the balance sheet Rightmove has suspended its interim dividend and introduced cost cutting measures. I believe the short-term revenue slump and future loss of profit is already included in the Rightmove share price.

Stamp duty holiday

The Chancellor’s stamp duty holiday was introduced to support the housing market. Help is needed as economic uncertainty and high unemployment are not good conditions for be buying a house.

Early indications are that this stimulus could work in the short term. Estate agents have been inundated with new vendors looking to capitalise on the stamp duty holiday. On 8 July Rightmove had over 8.5m visits to its website, one of its busiest ever days. 

Short-term optimism regarding the housing market could help the Rightmove share price bounce in the short term.

Increased competition

The number of traditional estate agents is declining. They are closing due to high office rents, fees, and increased online competition, such as Purple Bricks. Online competition is a long-term risk to the Rightmove share price as traditional estate agents are its biggest revenue producer.

There is also increased competition in the property portal market. On the Market is a credible competitor, which is majority owned by estate agents. Its unique selling point is that estate agents are offered equity in the business in return for portal listing exclusivity.

Long term

Increased competition and reduced revenue from estate agents is a long-term concern. In order to maintain its market share, permanently reduced fees may become necessary. The stamp duty holiday is excellent news for estate agents, which is excellent news for Rightmove. However, despite the short-term boost, the long-term outlook is mixed. I do not foresee the Rightmove share price surpassing its previous highs any time soon.

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The author does not own shares in Rightmove. The Motley Fool UK has recommended Rightmove. 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.

Unilever: a fund manager’s dream?

Unilever says its brands are present in 98% of the households across the UK. Globally, its products are used by 2bn people every year. It owns popular brands such as Marmite, Sure, Dove, Persil and Magnum to name just a few. Regardless of the state of the economy, consumers will be buying Unilever products.

Brand loyalty is one reason why top fund managers are attracted to investing in a consumer goods business. It ensures that revenues are predictable as consumers don’t want to be without their favourite products. Consumers are also likely to pay a premium for these products, which is why they’re generally highly profitable businesses. Unilever makes an impressive 20% operating profit from revenues in excess of €50bn.

Unilever is on sale

As a consequence of these excellent fundamentals,the price-to-earnings ratio of Unilever is about 18, above the FTSE 100 average of 15. However, due to Unilever’s potential for earnings growth, fund managers will not be deterred in further investing when the share price weakens. And it has done just that.

The share price is currently 16% down from this time last year at circa 4,300p. Despite this, it has been resilient to the effects of the coronavirus, falling only 3% since the start of the year. This is in contrast to the FTSE 100, which has lost nearly 19% of its value.

Quality, not quantity

Despite the recent fall, shares in Unilever are not cheap in relation to other businesses on the FTSE 100. As I said, the current share price discount could be enticing enough for fund managers to increase their holdings. While the price is low, I’d be inclined to follow them. They’re more likely to make a seemingly solid investment like this, rather than take a chance on cheaper stocks. As Warren Buffett says: “It’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price”.

This quote is a great reminder that we should invest in a business because of its excellent fundamentals. Being cheap is not a good enough reason to invest in any company.

Excellent dividends

Another good reason to invest in shares of Unilever is to benefit from its quarterly dividend payments. Not many companies in the FTSE 100 make payments that often. I see this as an excellent perk as it provides the investor with a regular income stream, offering regular opportunities to reinvest further. The current yield is just over 3.5% and the payments are growing above the rate of inflation. The dividend is covered a healthy 1.5 times by profit. 

Reinvesting quarterly dividends and profiting from any future share price recovery looks a savvy approach to me. I would also take comfort in knowing that when I buy, it’s highly likely one of the UK’s top fund managers will be doing exactly the same thing!

The post Unilever is on sale. I’d act like a fund manager and invest now! appeared first on The Motley Fool UK.

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The author owns shares in Unilever. The Motley Fool UK owns shares of and has recommended Unilever. 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.

HSBC share price woe

The HSBC share price has lost nearly 30% of its value since the beginning of the year. This loss is on par with its peers in the UK banking sector. However, it’s far worse than the FTSE 100 index as a whole, which has lost around 17% of its value.  

It’s easy to understand why the share prices of banks have been so badly affected. Interest rates are at record lows, all dividend payments have been suspended and with a pending global recession, bad debt levels could rise sharply.

But it’s a concern that despite the share price fall, HSBC is still not considered cheap. Its price-to-earnings ratio remains above the FTSE 100 average of 15. By comparison, Lloyds and Barclays have price-to-earnings ratios of less than 9.

Diverse global player

Why is HSBC more highly valued? One reason could be that it’s geographically diverse, operating in 64 different countries. It’s also the biggest international bank in mainland China, has a dominant market share in Hong Kong and a developing presence in India. Two thirds of its profits come from Asia and when economic growth returns to the region, HSBC will undoubtedly benefit. This is in contrast to banks such as Lloyds, that are more reliant on the strength of the UK economy.

HSBC also has a large investment bank, which in the short term will benefit from market turbulence as most of its revenues are generated through fees, rather than loan interest.

Geographic and product diversification provides the HSBC balance sheet with some defensive resilience. However, the challenges facing banks at the moment are global and it’s difficult to predict when more prosperous trading conditions will return.

Fallen dividend giant

At the beginning of the year, the HSBC share price was considered attractive for income investors. They were attracted by the high dividend yield, which was in excess of 5%, and the quarterly payments.

However, profits only just covered these dividend payments. So, it wasn’t a surprise when it announced that it had suspended its dividend policy due to the potential impact the coronavirus might have on its balance sheet.

On a positive note, retaining the dividend money and accelerating cost-cutting measures should ensure HSBC emerges from these troubled times leaner and more profitable. This can only enhance the share price if it’s done successfully.

So where does that leave my view of whether HSBC is a buy or not? There are several problems in the global banking sector that aren’t going to ease in the short term. However, the geographic diversity of HSBC is a strength that should see its share price recover more quickly than some of its peers when economic conditions do improve.

But for me, the HSBC share price still isn’t low enough for me to be confident that it can recover its losses in the next six months to a year. As a consequence, I think there are better places to be investing your money.

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The authors owns shares in HSBC Holdings. The Motley Fool UK has recommended HSBC Holdings. 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.

GlaxoSmithKline is a £33bn global healthcare behemoth that produces prescription medicines, vaccines and consumer healthcare products. Companies in the healthcare sector are non-cyclical as demand for their products remain high, regardless of the state of the economy. Up to the end of April, its sales had risen by 10% and underlying profits had increased by 14%. These strong fundamentals reaffirm my belief that any share price discount should be viewed as a great opportunity to invest.

Changing shape of the business

GlaxoSmithKline has plans to demerge the consumer healthcare side of the business via a joint venture with Pfizer within two years. The new business will sell healthcare staples, such as toothpaste, pain relief and cold and flu remedies. Consumer loyalty to brands such as Sensodyne and Paradol will ensure robust revenue streams and provide the business with defensive resilience to future economic challenges. The business will be similar in nature to sector rival Reckitt Benckiser, the owner of consumer healthcare brands such as Nurofen and Dettol.

The remaining GlaxoSmithKline business will focus on discovering, developing and selling prescription medicines and enhancing its large portfolio of available vaccines. Its business portfolio will be similar in nature to its sector rival AstraZeneca.

Increasing net debt to facilitate GlaxoSmithKline splitting into two has the potential to create investor uncertainty, which could negatively affect its share price. However, I believe any negative sentiment to the planned demerger is misguided.

It has long been muted by economic commentators that the sum of GlaxoSmithKline’s parts could be worth more than the whole. I don’t think this potential is factored into the current share price as the business is conservatively valued, with a price-to-earnings ratio of just 14.

Income champion

Since the UK went into total lockdown at the end of March, 41 companies in the FTSE 100 have either cut or deferred their dividend payments.

GlaxoSmithKline is an income investor’s dream, and is one of the few companies in the FTSE 100 that pays a quarterly dividend. Its dividend payments are sustainable and are covered nearly 1.5 times by free cashflow.

The 5% dividend yield is above the FTSE 100 average and dwarfs the sub-3% yields that shareholders of sector rivals Reckitt Benckiser and AstraZeneca receive.

Summary

I believe the long-term prospects for GlaxoSmithKline are excellent and that the current share price is undervalued. The dividend payments are sustainable, and the yields are excellent. The pending demerger should be viewed as an opportunity to enhance extra shareholder value.

I am convinced that investing in GlaxoSmithKline at the current share price and reinvesting those generous dividends has the long-term potential to make you rich and retire early.

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Ben Race owns shares of GlaxoSmithKline. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. 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.

Evolution, not revolution

In reality, SSE is already well established in the renewable energy market: the profits it generates from renewables already account for 38% of its overall profit. Its desire to treble its renewable energy output by 2030 is motivated by capitalising on sector growth and its undoubted profitability. This is in direct contrast to its energy networks business, which is slow-growing and highly regulated. It does have the potential to become a renewable energy star, but I suspect part of the upside may already be included in the current SSE share price.

Short-term momentum

The decision to offload its challenging household energy supply business was well received by investors. The income from this sale and the disposal of other assets is desperately needed to help fund the £7.5bn capital investment programme over the next five years. Ensuring net debt remains under control whilst funding new assets will be its biggest challenge.

Income investors were relieved that SSE maintained its dividend policy, despite the short-term challenges the coronavirus will have on its business. Whilst the dividend was cut for the first time since 1998, income investors will be buoyed that its current yield is still above 5%.

The SSE share price has only fallen 15% since the end of February. This is far less than the wider market during the same period and demonstrates the company’s good defensive qualities. The share price has upward momentum and is currently higher than it has been since the summer of 2018.

In summary

SSE is clearly on the right track, but I am not convinced it will become a renewable energy star just yet. My concern is that a lot of the positive news is already included in SSE’s share price. I don’t see it growing rapidly in the next few years as it struggles with the burden of financing a hefty capital investment programme, managing debt and maintaining the all-important dividend.

Renewable energy alternative?

Financing large capital investment programmes is the biggest barrier to entry in the renewable energy market. However, this is not a problem for The Renewables Infrastructure Group Limited, which cleverly funds its acquisitions using its revolving credit facility, which is then repaid via new equity releases. The company is multi-national, free from debt and pays a growing quarterly dividend of 5.5%. More than 75% of its revenues come from national governments, which provides it with relative revenue certainty and defensive qualities.

If you prefer to invest in a company with no debt and a growing dividend, this could be the renewable energy star you were looking for.

The post By investing in SSE shares, are you buying a future renewable energy star? appeared first on The Motley Fool UK.

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Ben Race has no position in any of the 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.

Short-term gloom

It is easy to understand why house prices are forecast to fall this year.

Supply of credit: The banks have tightened their lending criteria due to economic uncertainty, with nearly 50% fewer mortgage products available now than there were before lockdown. In particular, the number of lenders willing to offer 90% loan-to-value mortgages, essential for first time buyers, has shrunk dramatically.

Supply of houses: All the big four housebuilders stopped working for a period during total lockdown. In the period since, they are working on much reduced outputs as they comply with social distancing working restrictions and supply chain difficulties. Therefore, there will be less houses ready to sell this year.

Long-term outlook

Despite the short-term pressure on house prices, there is plenty to be optimistic about.

There is a national housing shortage and, to help alleviate this, the government is targeting 300,000 new houses per year by the middle of the decade. To assist, it continues to bankroll the Help to Buy scheme for first-time buyers and, where appropriate, relax planning constraints to facilitate new developments.

Interest rates remain at historic lows, making borrowing cheap and affordable. Since estate agents re-opened in May, new enquiries have been better than expected, with people wanting more space to accommodate home working.

Cash is king

The short-term fall in the value of the big four housebuilders is contrary to their strong balance sheets.

Last year, they each had revenues in excess of £2.9bn and operating profits of at least 19%. However, it is their retained earnings (cash) of at least £600m that convinces me that they can still take advantage of the long-term opportunities in the sector once the storm passes.

Prior to the coronavirus outbreak, housebuilders were among the most generous dividend payers on the FTSE 100. Berkeley Group is now the only one of the big four that continues to make dividend payments. It is easy to understand why, as it has retained cash of £1bn and made 26% operating profit last year. It currently trades 23% off its year high and it is top of my watchlist in the housebuilding sector.

In summary, long-term demand, low interest rates, government support and excellent balance sheets all suggest an excellent long-term outlook for the big four housebuilders. I think demand for new houses will remain constant despite economic uncertainty, and house prices will stabilise. I believe the current share prices are currently too low and think now could be the perfect time to invest.

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Ben Race has no position in any of the 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.