The Motley Fool

Why I believe the Taylor Wimpey share price will continue to beat the FTSE 100

Image source: Getty Images.

We’ve seen a weak 12 months for Taylor Wimpey (LSE: TW), as shares in the FTSE 100 housebuilder have dropped by 6% while the Footsie itself has gained 3%.

But they’re still up more than 55% over five years, which includes a big Brexit dip in June 2016. Fears that Brexit would lead to a house price collapse subsided soon after the vote and the slump was reversed pretty quickly, and I don’t see current fears of a significant downturn bearing fruit either.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

My colleague Peter Stephens has explained that, with UK economic growth looking feeble and consumer confidence weakening, there’s a fair bit of uncertainty surrounding the outlook for the housing sector at the moment. And the fact that Brexit itself is now only eight months away seems likely to bring those mid-2016 fears back into focus.

Buy or sell?

So, are you likely to be burned if you buy Taylor Wimpey shares now? Well, the number of houses on the market has been falling for most of this year as fewer people look to move upwards — and slowing house prices are continuing to dissuade folks from selling. 

Yet the market for new houses seems to be stable. According to Taylor Wimpey chief executive Pete Redfern in the most recent update at the end of April, the firm has “continued to see good demand for new housing through early 2018.” Mortgages are still readily available, and interest rates are at long-term lows.

Earnings growth at the company is forecast to slow considerably, but that still leaves a forward P/E of under nine for a stock set to deliver dividends in excess of 8% and rising. The next few months could be a great time for bargain hunters. 

Commercial property

Shares in commercial property firm Intu Properties (LSE: INTU) have fared far worse than Wimpey’s, losing more than half their value in a little over three years. And that wasn’t helped by a 7% dip Thursday on the day the firm’s first-half figures were released.

The numbers themselves seemed overshadowed by news of the departure of chief executive David Fischel, after a planned merger with Hammerson (LSE: HMSO) came to nothing. The initial offer would have seen Hammerson take over the shopping centre manager for around £3.4bn, but ultimately, aborted bids by French rival Klépierre led to the whole thing being called off.

Intu was left with costs of £6.3m relating to the incident, essentially in legal fees and advisors’ charges, and that didn’t help a first-half update which spoke of weakening sentiment in the retail market causing an impact on shopping centre valuations.

Rental fine

On the upside, an occupancy level of 97% was impressive, and like-for-like net rental income grew for the fourth consecutive year, even if only at 1.3%. 

But what probably spooks investors the most is a £650m asset hit from property revaluation leading to a fall in adjusted net asset value per share from 411p at 31 December to 362p.

On the earnings front, things were flat with underlying EPS unchanged from a year previously at 7.3p, and the interim dividend was held at 4.6p per share.

Looking forward, P/E ratios of around 12 seem reasonable to me considering the increasing weakness in bricks-and-mortar retail, but forecast dividend yields approaching 8% do grab my attention. I still see Intu as a decent long-term investment.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Alan Oscroft 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.

Where to invest £1,000 right now

Renowned stock-picker Mark Rogers and his select team of expert analysts at The Motley Fool UK have just revealed 6 "Best Buy" shares that they believe UK investors should consider buying NOW.

So if you’re looking for more top stock ideas to try and best position your portfolio in this market, then I have some good news for your today -- because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.