In the last three months, the FTSE 100 has fallen by 6% and, while this is disappointing, a number of stocks have fallen by a greater amount. For example, housebuilder Taylor Wimpey (LSE: TW) is down by 14% since mid-August as fears surrounding the prospects for an interest rate rise have caused investor sentiment in the wider housebuilding sector to come under pressure.
However, today’s trading update from Taylor Wimpey shows that it remains a relatively appealing buy at the present time, with it reporting strong sales numbers in the traditionally slower summer months which have continued into the autumn period. For example, sales rates for the year to date are ahead of last year at 0.76 sales per outlet per week (up from 0.66 last year), with targeted completions for 2015 being fully sold.
Looking ahead, Taylor Wimpey believes that a backdrop of rising real incomes and the wide availability of mortgage products will equate to a resilient housing market even with rising interest rates set to feature. As such, it remains on-track to post an increase in net profit of 32% in the current year, followed by further growth in earnings of 15% next year. After its recent share price fall, Taylor Wimpey now trades on a price to earnings (P/E) ratio of just 11.9, which indicates that it is a hugely appealing long term buy.
Similarly, building materials company CRH (LSE: CRH) also offers an enticing risk/reward opportunity. Like Taylor Wimpey, its shares have fallen by more than the wider index in the last three months, with them being down by 8%. However, this puts them on a price to earnings growth (PEG) ratio of only 0.5. This indicates that the company’s shares offer growth at a very reasonable price.
In addition, CRH has the scope to become a very strong income play, with its payout ratio forecast to fall to just 41% next year. So, while it presently yields just 2.7%, shareholder payouts could rise at a rapid rate in future years and act as a positive catalyst on investor sentiment and, subsequently, on the company’s share price.
Meanwhile, Vodafone (LSE: VOD) has also declined by 8% in the last three months, although the outlook for the Europe-focused company is beginning to improve. That’s because the ECB’s quantitative easing programme is likely to have a positive impact on the single-currency region and has the potential to deliver improved consumer sentiment and demand over the coming years. This should benefit Vodafone because it has invested heavily in European assets such as Kabel Deutschland and Spain’s Ono, while also investing heavily in its network across the continent.
In addition, Vodafone is also reacting to the changing landscape of UK media, with the company now offering a broadband service in the UK as well as the scope for a pay-tv service. Both of these spaces offer cross-selling and growth opportunities which, alongside a yield of 5.3%, make Vodafone a very appealing investment at the present time.
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Peter Stephens owns shares of CRH, Taylor Wimpey, and Vodafone. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.