The Covid-19 pandemic has halted life as we know it. Global markets have been in free fall and those with investments have been panic-selling. Others have been looking for opportunities to pick up some bargains.
Most industries are affected directly or indirectly by the government lockdown and global health crisis.
One of the main ones has been the property sector. Moving home as well as house building has ground to a halt in all forms. The property market has experienced a slowdown. Buying and selling properties is virtually impossible at this time.
Although construction sites are still operating, much to the annoyance of some of its workers, housebuilders have taken measures to protect themselves.
That said, there are two particular stocks I would avoid during this market crash. They are Rightmove (LSE:RMV) and Taylor Wimpey (LSE:TW).
The UK’s largest real estate website will be hugely affected by current events. Government advice has urged buyers and sellers to delay the process.
Since the market crash, it has seen a decrease of approximately 35% in share price. At the time of writing it is trading close to 500p a share. I would not view this an opportunity and there are other bargains to be had.
Generally speaking, performance for Rightmove has been promising. It released full-year results until 31 December 2019. This period, compared to last year, saw an impressive increase in revenue by 8%, as well as an 8% increase in operating profit. Dividend per share jumped by over 10% which will be seen as an attractive prospect for potential investors. Traffic to the website was up 2% also.
It had its busiest-ever month in January with more than 150 million visits. The top five busiest days ever on the site were all between 21 and 29 January, with Wednesday 29 topping the list with more than 5.7 million visits, up 9% on the previous record set on 24 April 2019.
Although the results are strong, the coronavirus will paralyse such businesses. Rightmove’s current price-to-earnings ratio sits close to 25 which to me displays the risk involved right now. The short-term future is not bright enough for me to risk buying some shares here.
House it going?
Taylor Wimpey, one of the UK’s largest housebuilders, has followed government advice and decided to close all its sales offices and construction sites.
Its share price took an almost 45% hit when the market crashed. Currently trading near to 120p, some would view this a cheap share to pick up. My train of thought could not be more different. With no real insight into when the pandemic may end, the financial hit they take could mean a long road to recovery for Taylor Wimpey and some of its counterparts.
Last week saw it release full-year results to 31 December 2019 and an update regarding Covid-19. Profits were up just over 3% compared to 2018, and the annual completion rate up over 5%. In a normal market these are positive takeaways. However, with the current crisis, Taylor Wimpey has followed the suit of many other companies and cancelled its final dividend as it battens down the hatches and preserves cash.
With the success of Taylor Wimpey, and other housebuilders for that matter, being so closely aligned with the pandemic, I would steer clear of all these types of stocks.
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Jabran Khan has no position in any 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.