A slew of positive releases from the housing sector has dragged investor appetite for Inland Homes (LSE: INL) higher in recent weeks.
The construction colossus has added 8% in value since the middle of June. But despite this heady ascent, I reckon the AIM-quoted firm remains hugely undervalued by the market.
Inland Homes joined its peers in throwing out perky trading details on Monday, advising that the number of open market unit completions soared 27.9% in the 12 months to June, to 188.
Revenues are expected to come in line with expectations for the full fiscal year, it advised, at £90m. Without the exclusion of two land sales at Alperton, Greater London and Aylesbury, Buckinghamshire — to be shown as a gain on sale of subsidiary or joint venture — revenue would have risen to £117m, up from £102m a year earlier.
The Amersham-based business has invested huge amounts in its construction capacity over the past year, a programme that should deliver robust sales growth in the years ahead as home demand powers along.
Chief executive Stephen Wicks certainly painted an upbeat picture today. He said: “A record £1.34bn short-term development pipeline; the creation of a highly experienced construction team which enables us to capitalise on partnership opportunities; and growing private housebuilding along with land sales has resulted in a dynamic, multi-faceted business model which will stand us in good stead for the future.”
Inland Homes added that forward sales rose 11.5% year-on-year as of June, to £26.1m as of June, underlining the resilience of buyer appetite.
The City certainly believes Inland Homes is on the right track, and anticipates a 9% earnings rise in the present fiscal period. As a result, the company sports a very-cheap forward P/E ratio of 7.9 times, no little distance below the long-established bargain benchmark of 10 times.
A sub-1 PEG multiple of 0.9 rubber-stamps the homes giant’s brilliant value. And if this wasn’t enough, investors are also expected to enjoy a 1.8p per share dividend, a projection that creates a handy 3.1% yield.
While fears of a slowing economy on homebuyer demand continue to linger, I reckon these concerns are more than baked into Inland Homes’ share price right now. Besides, the company’s emphasis on the more-affluent South and South East of England provides an added protective buffer should times become tough.
Informa (LSE: INF) is another grossly-undervalued growth stock, in my opinion, particularly as its improved international presence following recent expansion in the States, and a steady raft of product introductions, lights a fire under the top line.
In 2017 the publisher and events organiser is expected to deliver a 12% earnings advance. And another 7% rise is forecast for next year.
These estimates leave the FTSE 100 giant dealing on a prospective P/E ratio of 14.2 times, below the British big-cap average of 15 times. And Informa also carries a very undemanding PEG rating of 1.2.
When you throw a chunky 3% dividend yield into the equation too (created by a forecast 20.3p per share dividend), I reckon the London business is worthy of serious attention.
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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Inland Homes. 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.