I’ve been searching for UK bargain stocks myself, and three have recently caught my eye: Serabi Gold (LSE:SRB), Crest Nicholson (LSE:CRST), and NCC Group (LSE:NCC).

Serabi Gold

Gold stocks like Serabi Gold have come under pressure as bullion prices have retraced. This particular one’s down 13% over the last month, as a resurgent US dollar has hit gold demand by making it more expensive to buy and hold.

Yet underlying demand for the shiny safe haven remains strong. World Gold Council data shows global holdings in gold-backed exchange-traded funds (ETFs) rose by 61 tonnes in Q1. I’m not surprised.

Gold is traditionally in high demand when inflation rises and geopolitical crises emerge, and so could continue recovering in price. I also expect central bank gold demand to keep rising as institutions diversify away from the dollar.

Investing in mining stocks can be risky given the operational challenges they encounter. But on balance, I think there’s scope for Serabi shares to rebound, helped by its rock-bottom valuation. At 300p, its price-to-earnings (P/E) ratio for 2026 is just 6.1 times.

Crest Nicholson

Those gold-boosting inflationary pressures threaten to have an opposite effect for Crest Nicholson. Housebuilders like this are highly sensitive to interest rates and their impact on buyer affordability.

Accordingly, Crest’s shares have dropped 12% over the last month. But I think this represents an attractive dip buying opportunity to consider. At 110.6p per share, the builder’s P/E-to-growth (PEG) multiple is 0.1 for this financial year (to October 2026).

That’s miles below the value watermark of one. And it remains ultra-low for the following two fiscal years, at 0.3.

I’m confident Crest Nicholson shares could recover steadily over time, driven by rising demand for newbuild properties as the UK population expands. Government plans for 300,000 new homes a year provides an enormous earnings opportunity.

NCC

Tech spending by companies can slump when economic conditions worsen. But have fears over NCC’s future profits been overblown? I think perhaps so — the cybersecurity company’s dropped 11% in value over the last month.

With cyber attacks becoming more numerous and advanced, having software that protects against such threats isn’t a luxury. It’s a necessity. According to UK Finance, “52% of global organisations report that their average ransomware payout now exceeds their annual cybersecurity budget“.

These figures also suggest enormous growth potential I don’t think is reflected in NCC’s valuation. For the financial year to September, the P/E is just 7.8. The business provides cybersecurity and software assurance services, and is switching to longer-term contracts with recurring revenues to better capitalise on a market that’s booming as companies increasingly digitalise their operations.

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However, two tectonic shifts are reshaping the sector. These are Labour’s radical planning reforms targeting 1.5m new homes by 2030, and mortgage rates plunging as markets price in Bank of England rate cuts. 

These catalysts have driven a 16%-25% sector rally since April 2024, prompting investors to reconsider the embattled industry.

The policy and pricing pivot

Deputy PM Angela Rayner’s planning overhaul represents the most significant pro-development shift in decades, replacing local veto powers with mandatory housing targets and fast-tracked approvals. It could be a massive step forward in unlocking land banks and getting shovels in the ground sooner rather than later. Of course, this pro-development shift comes at a cost. In my native Somerset, new developments and planned developments are already affecting the countryside I grew up in.

Concurrently, lenders have slashed fixed-rate deals below 4% despite the Bank Rate remaining at 4.5%, with traders pricing in multiple 2025 cuts starting 8 May. This dual stimulus of easier construction and cheaper mortgages could revive housing transactions from their post-Stamp Duty holiday slump. Nationwide suggests that prices are already stabilising at £270,752 with 3.4% annual growth.

Value or value trap?

Persimmon trades at 14.1 times expected earnings for 2025. However, its net cash position (£168.8m), sector-leading 4.6% dividend yield, and 65.5% payout ratio suggest disciplined capital allocation. Analysts point to a 15% discount to fair value, with some encouraged by its 2025 completion guidance of 10,500+ homes.

Crest Nicholson presents a riskier proposition. It’s much smaller than Persimmon but worthy of comparison. It’s 21.8 times 2025 price-to-earnings (P/E) ratio reflects turnaround hopes after a disastrous 2024 (£103.5m net loss), but net debt of £59.5m and erratic cash flows raise sustainability questions. The 1.9% dividend yield trails sector averages, though management’s 41% payout ratio leaves room for growth if projections are realised.

Persimmon’s premium multiples (versus the sector average) reflect its scale, land banks strength and consistent execution — it delivered 10,500 completions in 2024 despite market woes. Crest’s higher valuation bets on successful restructuring. Recent updates suggest the company could be back on track.

The bottom line

The sector may experience something of resurgence in 2025, although growth’s often priced in well in advance. In all honesty, neither of these companies really excite me, although Persimmon’s 4.6% yield and fortress balance sheet could offer relative safety in a cyclical sector and make it worth a closer look.

I also recognise that growth investors might consider Crest’s potential if planning reforms disproportionately benefit smaller developers. Naturally, this comes with execution risk. I’m watching carefully from the sidelines for now.

The post Is it time to reconsider these FTSE housebuilder stocks? appeared first on The Motley Fool UK.

Hochschild Mining

The precious metals price surge has lifted Hochschild Mining (LSE:HOC) shares through the roof in recent times. But investors can still get good value from the gold and silver producer today.

City analysts think annual earnings here will soar 104% year on year in 2025. That leaves it trading on a price-to-earnings (P/E) ratio of 10.4 times. On top of this, Hochschild’s corresponding price-to-earnings growth (PEG) ratio is 0.1. Any reading below 1 indicates that a stock is undervalued.

The FTSE 250 miner owns a handful of assets across South America, which leaves profits at group level less sensitive to isolated operational problems. Costs remain a wide scale issue however and in January, Hochschild hiked its cost forecasts for the year.

Yet despite these pressures, I believe gold and silver’s continued bull run makes the mining giant an attractive share to think about.

Supermarket Income REIT

Investors seeking protection from an escalating trade war have piled into Supermarket Income REIT (LSE:SUPR) shares in recent weeks. The trust’s focus on the ultra-stable food market, combined with its focus on the UK, make it a natural safe haven as global trading rules face a potential earthquake.

Yet despite these price gains, the real estate investment trust (REIT) still offers excellent value right now. It trades at a meaty 12.4% discount to its estimated net asset value (NAV) per share.

The trust also continues to offer market-smashing dividend yields. Approaching 8%, its forward reading makes mincemeat of the 3.7% average for FTSE 250 shares.

Supermarket Income — which rents properties out to retail giants such as Tesco, Sainsbury’s and Carrefour — offers distinct advantages to dividend chasers. In exchange for tax perks, at least 90% of its annual rental profits have to be paid out to shareholders.

Be mindful when considering this one that overall returns could be impacted by interest rate changes that hit NAVs and drive up borrowing costs.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Crest Nicholson

With the UK economy spluttering, a sustained recover for housebuilders like Crest Nicholson (LSE:CRST) is by no means guaranteed. And that’s not the only threat, as a potential trade war could fuel inflation and drive up housebuyer costs through higher interest rates.

However, I think this threat’s baked into many of these companies’ low valuations. With this particular FTSE 250 operator, its shares trade on a price-to-book (P/B) ratio below 1, which implies a discount relative to the value of the firm’s assets.

Potential investors here should also be encouraged by the resilience of the housing market despite tough economic conditions. Crest Nicholson’s own open market sales rate (excluding bulk purchases) was 0.61 in the 10 weeks to 14 March, up from 0.5 a year earlier.

Housebuilders like this could be great long-term investments to research too, as Britain’s soaring population drives demand for new homes.

The post 3 of the best FTSE 250 bargain shares to consider today! appeared first on The Motley Fool UK.

A big fat zero

At first inspection, Close Brothers (LSE:CBG) might look appealing. The dividend per share over the past year has been 45p, so when I combine this with the current share price I get a yield of 9.43%.

However, this only tells half the story. Back in February, the company released a statement in which it announced that it wouldn’t be paying any dividends for the current financial year. This was due to the ongoing review from the Financial Conduct Authority (FCA) regarding historical motor finance commission arrangements.

Depending on the outcome of the review, Close Brothers could be fined and penalised in other ways. Therefore, it makes sense to try and preserve cash flow for any potential need here.

Yet for a dividend investor like me, I see little point in buying now. The dividend yield is misleading, as I wouldn’t be getting any dividends in the near future.

That said, the 43% drop in the share price over the past year might lead some value investors to buy for the long term. It’s true that the bank has a strong track record, having been founded over a century ago.

Struggling at the moment

A second firm I’m cautious about is Crest Nicholson (LSE:CRST). The share price for the UK home builder is up 8% over the past year. However, I don’t feel this tells the full story.

The business has issued several profit warnings over the past year. The last one came just a couple of months ago with the half-year results. It was blamed on various things, ranging from a low level of reservations, a tough macro backdrop, along with one-off exceptional items. The disappointing finances meant that the dividend paid was just 1p per share, in contrast to the 5.5p from the same time last year.

This has reduced the dividend yield to 5.86%. However, some might think that this is still attractive, as it’s above the FTSE 250 average yield. This is true, but something else concerns me.

Bellway has just pulled out of making a firm offer for Crest Nicholson. The larger rival believes it has a strong enough balance sheet to grow organically. Without this deal, it’ll likely make it harder for Crest Nicholson to get back to financial health quickly. The stock fell 15% last week when the news was announced.

Therefore, I see future dividends under pressure of being cut again. Until the firm starts to perform better, it doesn’t look attractive to me. Of course, I could be wrong. Homebuilders should benefit from lower interest rates here in the UK. This should make mortgages more affordable and provide higher demand for property sales.

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In need of repair

The first company is Crest Nicholson (LSE:CRST). It’s one of the leading property developers in the UK. over the past year, the stock is down 14%.

The property sector in general has endured a tough couple of years, ever since interest rates started to rise and inflation surged. Higher inflation means that it’s a lot more costly to build properties. At the same time, high interest rates makes it harder for people to get a mortgage and afford to buy a property.

A 14% fall in the past year has compounded the 55% drop over a broader three-year period. This is why I flag it up as a value stock. The property market is cyclical. Over the next couple of years, I expect interest rates to fall and economic growth to increase. This should support higher demand for housing and better financial results for Crest Nicholson.

However, the firm has also been hit recently with building defects that could cost £15m to fix. Therefore, even though I like the sector in general, I’d prefer to buy a different homebuilder from the FTSE 100 or FTSE 250 that has fewer company-specific issues.

A value stock I like

The second underperformer is Octopus Renewables Infrastructure Trust (LSE:ORIT). The fund aims to provide generous dividend income by investing in a diversified portfolio of renewable energy assets. This isn’t just in the UK, but rather the portfolio includes sites across Europe and even Australia.

Over the past year, the stock is down 29%. I should note that the share price movements are different to the net asset value (NAV) movements of the fund. So the share price is currently trading at a 33% discount to the last reported NAV. This is where I think the value lies going forward.

The fall in the stock can be attributed to what the 2023 annual report noted as “a challenging backdrop both for the asset class and the investment trust sector as a whole.” Lower power prices are also to blame. Risks remain, but there’s nothing I note that should have caused such a large reaction in the share price over the year.

On that basis, I think that the trust is a smart value buy to consider. I’m also influenced by the 8.14% dividend yield. Given the focus of the trust on paying out income, I don’t see this under immediate threat of being cut. Therefore, I can look to benefit from the high yield while waiting patiently for a recover in the stock. I’m thinking about buying the trust now, but staying away from Crest Nicholson.

The post Down 13% in a month, should I buy these FTSE 250 value stocks? appeared first on The Motley Fool UK.

FY results, released 23 January, show a 28% drop in revenue in 2023. And adjusted profit before tax was hammered — down to just £41.4m, from £137.8m the previous year.

No wonder, then, that the share price is down 40% in the past five years.

The firm also took a £13m charge related to a legal claim over fire damage at one of its developments.

But I do think the tide could be turning.

Crest ended the year with net cash of £64.9m. That’s some way down on the FY 2022 figure of £276.5m, but at least it’s positive.

Green shoots

The company also raised its investment in land over the year, adding 3,864 new plots.

I remember in the last sector slump, all the house builders were buying up land when it was cheap. And that led to a long bull run. Same again? I hope so.

By 19 January, Crest’s forward sales had reached 1,732 units. At the same point a year ago, the figure stood at 2,018, but that was before the mortgage rate crisis had really set in.

At this point, I think that looks good.

Dividend

The bad news for dividend investors is that the annual Crest cash payment should fall in 2024. The firm kept the 2023 total dividend in line with last year, at 17p per share. On the current share price, that’s a yield of 8.2%.

But the board said it “expects to return to its policy of 2.5 times cover going forward“.

Broker forecasts suggest only around 2.6% for 2024, but they already have it rising to 3.6% in 2025. And if this is the start of the hoped-for recovery, it might just mark the start of a solid long-term income stream.

The price-to-earnings (P/E) ratio should drop to 12 by 2025 too, if the analysts are right. That’s lower than Taylor Wimpey and Persimmon, as two examples, though those are still on bigger forecast dividends.

Outlook

Crest Nicholson stock hasn’t attracted the investors the way some other builders have. But some low-margin developments in recent years have held it back — and that’s not good when markets are already tough.

But I think CEO Peter Truscott sums up the outlook for the property market in general, when he says: “The medium-term prospects for housing demand remain positive with the structural under supply of housing, however the challenging planning environment is likely to slow volume growth in the sector.“

Long-term gains?

So, maybe another tough year ahead. But we’re still in a chronic housing shortage.

Crest Nicholson might be one of the risker house builders right now, largely due to its relatively small size and because of some specific profitability issues.

But after getting through 2023 intact, I reckon it could be an overlooked long-term buy now.

The post After a tough year, is this overlooked FTSE 250 stock set to climb? appeared first on The Motley Fool UK.

However, I saw a note from Berenberg last month and thought it might be worth paying Crest a little more attention. Here’s why.

Valuation

Crest Nicholson trades at around 3.9 times 2022 earnings. However, the issue is that the housebuilder isn’t going to perform as well in 2023. Profit before tax is now expected to come in at £50m for the year to 31 October, a 30% cut on previous guidance and down from £138m the previous year.

Currently, the housebuilder, which has predominantly focused its operations on the South of England, trades at 11 times expected earnings.

Commenting on the valuation, brokerage Berenberg said: “This leaves the group, even on significantly downgraded forecasts, as the most lowly rated housebuilder in the peer group, and we think this asset-backed valuation is very compelling.”

Moreover, we can also see that Crest is currently trading at around 0.5 times tangible net asset value. In other words, the assets it owns are worth double the company’s valuation. This is a highly compelling metric.

And looking around, it’s hard to find many housebuilder stocks cheaper.

Will conditions improve?

It’s great when we find a stock that appears cheap. But sometimes these companies are falling for good reason, and they may have further to fall.

So, what about Crest? Will its performance recover and will things become easier for builders?

Well, it’s unusual to see a company so open about the issues generated by higher interest rates, the end of the help-to-buy scheme, and “economic uncertainty arising from the September 2022 mini-budget.”

Housebuilders had become heavily reliant on government schemes in recent years. Crest, at least from my own experiences with the company, appeared to have a strategy geared towards the upper price boundaries of the scheme — £450k outside London, and £600k within it.

This is certainly a concern. After all, the help-to-buy scheme provided so many first-time buyers with what was essentially a deposit contribution.

Analysts have been revising their forecasts down for the firm, with earnings per share (EPS) expected at 16.3p in 2023, 13.5p in 2024, and 18.2p in 2025. However, these forecasts have been changing wildly over the past year.

Personally, I see more positives in 2024 with interest rates stabilising — some of the forecasts included in the above consensus EPS are already outdated. After all, there’s an acute shortage of houses in the UK and Britons won’t wait forever to move.

Dividends

If I were to look at Crest Nicholson on the Hargreaves Lansdown platform, it would tell me that the firm is offering a 9.9% dividend yield. That’s one of the highest yields on the FTSE 250.

However, with analysts forecasting EPS to come in around 16.3p in 2023, it seems unlikely that Crest will maintain its stated dividend from 2022 — 17p which was covered 2.5 times by earnings.

Nonetheless, I still hold a positive outlook on the firm, especially from the current share price. In fact, I’m tempted to increase my position.

The post Overlooked? Are Crest Nicholson shares the cheapest among housebuilders? appeared first on The Motley Fool UK.

I’m talking of FTSE 250 housebuilder Crest Nicholson Holdings (LSE: CRST), and we have an update on its full-year outlook.

As one of the UK’s smaller builders, it’s surely more at risk from the ups and downs of the property market. It just doesn’t have the sales buffer of its big FTSE 100 cousins, such as Taylor Wimpey and Persimmon.

Under pressure

And the FTSE 250 firm does seem to be under more pressure now. A 21 August update told us that “against a backdrop of persistently high inflation and rising interest rates, trading conditions for the housing market have worsened during the summer of this year“.

The board cut its full-year guidance, now expecting adjusted profit before tax for 2023 to come in at around £50m. That’s down from the £73m indicated at the halfway stage.

Stable share

Crest Nicholson shares fell a huge 12% when the market opened. And the price is now down 55% in the past five years.

Might this be a great time to buy before the storm starts to clear?

Dividends

Despite the drop, a £50m profit still looks fair to me. And if that’s the worst we get when UK house prices are in their biggest slump for years, I see a resilient business.

The board also confirmed its committment to a full-year dividend of 17p per share. With the share price down at 170p at the time of writing, that’s a big 10% yield. But though it’s one of the best in the sector, the market wasn’t pleased.

Too optimistic?

Is the outlook for Crest even worse than this profit warning suggests? Well, some investors won’t be happy with one worrying development.

The mixed-use Brightwells Yard project in Farnham looked set to make a loss of £11.6m at interim time. But it’s now widened by a further £4m. That’s no small change for a firm with annual profits of £50m.

Income stocks

Still, there are two key things that put housebuilders among my favourite long-term income stocks. And Crest Nicholson touched on both in this update.

“Over the medium term [the board] expects inflation to abate and mortgage rates to start to reduce“. That’s key. And, surely, we all know it has to happen, don’t we?

The statement also spoke of “an experienced leadership team who are used to trading through downturns in the cycle“.

And the cyclical nature of the housing market might just excite me most.

Best time to buy

A cyclical sector might be a poor choice for investors with a horizon of just a few years. And a smaller firm like Crest Nicholson could well face more pain before things improve.

But when a cyclical stock is down, its shares look cheap, and it’s a business with good long-term cash potential, isn’t it the best time to buy?

The post Here’s why this could be the best FTSE 250 income stock to buy right now appeared first on The Motley Fool UK.

Ideally, I’m after established companies with simple business models and competent management teams. And I have a particular interest in ‘fallen angels’ — companies with depressed share prices that might be recovery plays.

A FTSE 250 faller

In my latest search for undervalued shares, I came across Crest Nicholson Holdings (LSE: CRST). Crest Nicholson’s stock popped up for two reasons. First, for being lowly rated; second, for offering a very high dividend yield.

However, I was wary of running the numbers for this particular share, because Crest Nicholson is a UK housebuilder. Alas, the worst-performing stock in my family portfolio over the past year has been a larger rival firm — hence my initial wariness.

Another reason for my hesitancy was that Crest Nicholson stock has been a flop over multiple timeframes. Here’s how the shares have performed over seven different periods:

Over all seven timescales, ranging from one day to five years, this stock has lost value. Indeed, it has almost halved over the past half-decade, a period during which the FTSE 250 lost only 8.7%.

However, the above figures exclude dividends, which are a core component of returns from UK housebuilders’ shares.

This appears to be a value stock

Looking at Crest Nicholson’s fundamentals, I can see why some investors are keen on this stock. On the surface, the shares look undervalued on two levels.

First, this share trades on a lowly price-to-earnings ratio of 6.5, which translates into an earnings yield of 15.4%. That’s a considerable discount to the FTSE 250’s earnings multiple.

Second, it offers a market-beating dividend yield of 7.5% a year. That’s way ahead of the FTSE 250’s yearly cash yield of around 3.4%. What’s more, Crest Nicholson’s cash payout is covered twice by historic earnings, which is some comfort.

Now for the bad news

Another potential value indicator is that this stock is trading much closer to its 52-week low of 170.5p than to its 52-week high of 293.6p. Then again, this might be a reflection of future weakness or current uncertainty.

One thing is for sure: UK house prices are sliding. At the end of May, the average property price was 1% lower than at end-May 2022. This was the first yearly fall in prices since December 2012. That can hardly be good news for sellers of homes, right?

Also, UK mortgage rates have soared since 2021, lifting mortgage payments and making homes less affordable. Today, yields on gilts (UK government bonds) soared to highs exceeding those seen during the ‘mini-Budget’ crisis of September 2022.

As a result, it won’t be long before the average five-year, fixed-rate mortgage is priced above 6% a year. This would be a huge blow for homebuyers and borrowers coming off much cheaper fixed rates.

In summary, given the growing risks of a house-price crash, I will steer clear of this FTSE 250 stock for now. But if it keeps getting cheaper, then who knows?

The post 7.5% dividend yield! Is this FTSE 250 share a brilliant bargain? appeared first on The Motley Fool UK.

Property developer

As a quick introduction, Crest is a property development business. It focuses its operations primarily in and around the London area. It builds and sells properties such as family homes, apartment complexes, and more.

So what’s happening with Crest shares currently? Well, as I write, they’re trading for 224p. At this time last year, the stock was trading for 378p, which is a 40% decline over a 12-month period. Many stocks have come under pressure due to macroeconomic headwinds as well as the tragic events in Ukraine.

An income stock with risks to consider

Soaring inflation, the rising cost of materials, and the global supply chain crisis could cause Crest issues. When costs rise, profit margins are put under pressure. If prices are hiked, Crest risks losing customers.

Supply chain issues could also impact operations, including the completion of properties to sell. Finally, the Bank of England (BoE) has increased the base interest rate to combat soaring inflation. The issue here is that this makes mortgages more expensive for consumers. This could affect demand for Crest too.

Another risk to note is that dividends are never guaranteed. I must bear this in mind when considering any stock for dividend income. Dividends can be cancelled at any time. This is more likely to happen during times of economic volatility, like now, when companies may need to conserve cash.

The positives and what I’m doing now

So to the positives, then. I like Crest’s business model of focusing its operations in the South of England. This is because property prices are traditionally higher in this region. That means that it is in a position to sell at higher prices and make higher margins. This could support performance growth and returns.

Next, there is a severe shortage of homes in the UK. With demand outstripping supply, Crest should be able to leverage this increased demand to boost its performance and levels of return.

As with any income stock, I want to understand the level of return I could receive. I look at the dividend yield to learn this. At present, Crest shares yield 6.6%. This is over three times the FTSE 250 average of 1.9%.

Although I am aware that past performance is no guarantee of the future, I am buoyed by Crest’s latest trading update. A half-year report for the period ended 30 April was released in June. It confirmed that revenue increased by over 12% compared to the same period last year. In addition, profit, home completions, units sold, and net cash increased too. An interim dividend of 5.5p was declared.

In conclusion, I like Crest Nicholson shares. I am not worried by current volatility in the market and the fact the share price has fallen. In fact, this makes the shares more appealing. I would add the shares to my holdings as an income stock to boost my holdings for the long term.

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