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One bargain stock and one growth monster I would buy today

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Crest Nicholson Holdings (LSE: CRST) has given investors a bumpier ride than many housebuilders over the past 12 months. While Barratt Developments is up 24% over the past year, and both Bovis Homes Group and Persimmon are up around 37%, it has mustered growth of just 6%.

Best Crest

Investors aren’t too excited about today’s final results for the year to 31 October, with the stock down 0.5% at time of writing. The numbers were steady enough, with sales and joint ventures up 7% at £1.07bn, and pre-tax profits up 6% to £207m. Net cash fell from £77m to £33m.

Volumes rose just 2% at 2,935 homes, but chief executive Stephen Stone sees faster growth ahead. “Our new business divisions are continuing to grow, driving increases in sales outlets and underpinning our ambitious sales target of £1.4bn in 2019.”

Today’s report is more promising than last October’s, when Crest Nicholson warned that profits may come in at the lower end of guidance. The new-build housing market continues to be robust, sustained by strong demand, a benign land market and government policies to improve access to housing.

Dividend delight

What really catches the eye is the forecast valuation of just 7.3 times earnings, coupled with a price/earnings to growth (PEG) ratio of 0.7. Crest Nicholson has been hit by the slowing market in London, but elsewhere house prices continue to rise steadily.

City analysts expect earnings per share (EPS) growth of 9% in 2018 and 15% in 2019. Throw in a forecast yield of 7% and the investment case looks even stronger, unless you anticipate a property crash. For the record, management hiked the dividend by 20% today to 33p, nicely covered two times. Here are two more hot stocks that could make your fortune.

Cheers!

While Crest Nicholson has underperformed its otherwise buoyant sector, pubs and hotels chain JD Wetherspoon (LSE: JDW) has done the opposite, outperforming a troubled corner of the economy, which has punished rivals such as Greene King. The company’s stock is up a fizzy 36% over one year and 157% over five. Although it isn’t the only monster growth stock on the high street.

It is up 3% after today’s Q2 trading statement showed like-for-like sales rose 6% and total sales 4.3%. “As a result of better-than-expected sales, year-to-date underlying profit before tax is slightly ahead of our expectations,” the update said. But there was a proviso that “similar outperformance in the second half will be more difficult to achieve” due to tough comparatives.

Tiger Tim

Chairman Tim Martin included a lengthy swipe at those who predicted soaring food prices following the Brexit referendum. When he finally got onto Wetherspoon he warned that: “We face significant costs in the second half in areas which include labour, business rates and the sugar tax. There will also be some uncertainty as to the effects on our business of the FIFA World Cup.”

The stock currently trades at a forecast 18.9 times earnings, reflecting recent strong growth. EPS are forecast to hover between -2% and +2% over the next three years, sharply down from 43% in 2017. Today’s yield of 0.9% offers little compensation. You could buy it today, or maybe wait for a better entry point.

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Harvey Jones 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.