The FTSE 100 rebounded today after an initial dip at the open, as investors wait on key economic data from the US, including the unemployment rate.
Following company news is one method I use to look for long-term opportunities for UK shares to buy. Here in the UK, there are a number of headlines in particular that caught my eye today. Based on what is in the news today, here’s one UK share I’d buy and one I’d avoid.
According to data published by Halifax on Friday, UK house prices fell for the second consecutive month in February. The average price of a property in the UK dropped 0.1% to £251,967. That came after a drop of 0.3% in January.
House prices grew significantly in 2020, despite the economic uncertainty caused by the Covid-19 pandemic. The average price is 5.2% higher than in February last year.
I think that if house prices continue to fall, this may have an negative impact on UK housebuilders, including Taylor Wimpey (LSE:TW.). While the company has posted a series of strong trading updates in recent months, rising property prices have contributed to that.
While the Stamp Duty holiday has been extended, this is due to return to pre-Covid-19 levels in October. This means that anyone who purchases a property from then onwards won’t have to pay tax on the first £125,000, as opposed to the current level of £500,000. Demand could soften as a result.
That said, the UK economy could well be in a much better position by October, offsetting any potential drop in demand. In addition, lending conditions remain favourable for homebuyers at the moment, which could see prices continue to rise further over the next year.
Until there is a little more clarity about the strength of future UK house price growth, I will avoid buying Taylor Wimpey shares right now.
FTSE 100 group London Stock Exchange (LSE:LSE) was also in the news on Friday after it published its full-year earnings report.
While it posted higher full-year profit and sales, the market was not convinced. At the time of writing, LSE shares were down more than 11% on Friday. This doesn’t make sense to me. LSE shares have a strong history of recent growth, with the share price up more than 100% over the last two years.
Some may be confused about LSE’s listing, as it is also the exchange where UK stocks are traded. The company makes money through fees charged for trading on the exchange, as well as information services which are provided on a subscription basis.
LSE’s operating profits for 2020 were 5% higher than the year before, to £209.7m, with adjusted basic earnings per share growth of 7%, to 75p.
The company has said it is well positioned for future growth, and it does not tend to be too badly affected by swings in the UK economy.
That said, as with any stock investment there is risk to buying LSE shares. And, based on its current profits and share price, LSE has a price-to-earnings (P/E) ratio of 47. As a result, the shares are somewhat expensive. Despite that, though, with the share price falling on Friday, I see it as a good opportunity to buy LSE shares.
conorcoyle 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.