Who Else Gains As Carney Steadies The Housing Market?

As buyers turn new houses into homes, footfall finds its way to the DIY and furnishing retailers.

| 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.

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.

The Bank of England has stepped in and implemented measures to cool the overheating housing market, as economists warn of an impending property bubble. The market reacted positively to the timely intervention with all the house builders seeing share price rises.

Who Else Will Reap Rewards?

The UK housing market is the biggest driver of home improvement and furnishing retail sales. Analysts are predicting that over a million people will move house this year, and they are anticipating growth of 5.5% this year and 6.3%in 2015.

As buyers embark on turning new houses into homes, footfall consequently finds its way to the DIY and furnishing retailers. Here are three companies that could benefit:

carpetright

Carpetright plc (LSE: CPR) is Europe’s largest flooring retailer its business is closely tied to the property market because householders buy new flooring when they move house. Although the UK’s property market surged recently the company has issued a series of profit warnings.

Lord Harris, founder and chairman of Carpetright said the time lag between buying a property and spending money on refurbishing it has increased as buyers “have to pay a larger deposit than they used to, which gives them less money. Buyers are now waiting to fit new carpet and flooring whereas before it was one of the first things they did.

It is however upbeat about future prospects for the business, with the launch of several new products in a new and rapidly growing segment. Group revenues declined 2.2 per cent in the year ending April, with an underlying pre-tax loss of £4.6m compared to losses of £9.7m for the previous year.

b&qKingfisher plc (LSE: KGF) is Europe’s largest home improvement retailer and the home of B&Q which is the UK’s leading DIY and garden center retailer Ian Cheshire, chief executive of B&Q owner Kingfisher, has made it clear he believes a return to a more buoyant housing market will reverse the decline that has hit the DIY market in recent years.

The DIY market has shrunk to £7.54bn in 2012 from £9.76bn in 2004, but Cheshire believes this is due to a lack of first-time buyers and not a more fundamental decline. Investors seem to think he is right – Kingfisher’s shares are up more than 40% this year to date.

travisperkinsTravis Perkins plc (LSE: TPK) is the building materials supplier to the trade, and the company behind brands such as Plumbing Supplies, Tile Giant and Wickes. It is now one of the largest suppliers to the UK’s building and construction industry. Time-pressured homeowners are increasingly turning to tradesmen to do refurbishment work that they would have previously tried themselves and Travis Perkins has seen its share price increase almost 13% on last year’s price. The company has eleven analysts that have assigned it a buy rating and the average price target is £18.25 and is currently trading at £16.45

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.

Lisa Walls-Hester does not own shares in the above companies.

More on Investing Articles

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

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »

Investing Articles

Investing £5 a day could help me build a second income of £329 a month!

This Fool explains how £5 a day, or one less takeaway coffee, could help her build a monthly second income…

Read more »