Should you buy Rightmove plc and Taylor Wimpey plc after today’s results?

There’s no sign of a property crash at Rightmove plc (LON: RMV) and Taylor Wimpey plc (LON: TW), says Harvey Jones.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The property sector has been one of the hardest hit by Brexit, with housebuilder share prices hammered and investors rushing to flee open-ended property funds. Two property-related companies have published their results today, and the early signs are that once again, the post-referendum panic has been overdone.

Do the right thing

The UK’s leading property portal Rightmove (LSE: RMV) has released a positive set of first-half results, showing a 16% rise in revenues to £107.9m and underlying operating profits up 17% to 82.3m. Investors are celebrating an interim dividend of 19p, which is 3p higher than last year.

Referendum uncertainty hasn’t dented the British love of property portal surfing, with a 15% rise in visitors to 765m, while average revenue per advertiser hit a record £830 a month. Management admits the economic outlook is more uncertain than it was, but believes the site’s strong brand and dominant 77% market share leave it well placed to withstand the turmoil. Investors clearly agree, with the stock up 10% in early trading.

Should you invest £1,000 in Rightmove right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Rightmove made the list?

See the 6 stocks

Move on up

At today’s 4,087p, Rightmove’s share price is still below its pre-referendum high of 4,225p, but well above its subsequent low of 3,173p. The stock has recovered strongly but as yet we don’t know the full impact of Brexit on the housing market. UK residential property may look pricey by traditional measures but with mortgage rates at record lows and likely to fall even lower, and demand still outweighing supply, the house price crash doom-mongers are likely to be proved wrong again. The only thing that concerns me is that the stock is expensive at 31.22 times earnings, and yields just 1.04%.

Taylor made

Housebuilder Taylor Wimpey (LSE: TW) also had a bad Brexit, its share price crashing from 192p to 115p on 24 June, a drop of 40% in a day. That was a great moment for bargain seekers as the stock is now back up at 151p, helped by a 5% rise after this morning’s half-year results.

Management says trading conditions have been normal since the referendum, while admitting the long-term impact is still impossible to gauge at this early stage. What we do know is that Taylor Wimpey completed 6,019 homes over the first half, with the average selling price up 5.8% to £238,000. Profits before tax rose 12.1% to £266.6m.

Far from Wimpey

Taylor Wimpey expects to reward shareholders with at least £150m in ordinary dividends each year – plus specials on top. It’s paying £300m this month and plans to do the same in July next year. This level of confidence is refreshing amid the overdone post-Brexit panic.

The company is also underpinned by strong housing market fundamentals, as the UK urgently needs new homes and mortgage rates may go lower still. Government first-time buyer schemes such as Help to Buy will also sustain the market, and new Chancellor Philip Hammond may have more stimulus up his sleeve. Better still, trading at 9.72 times earnings, Taylor Wimpey isn’t expensive, and its forecast yield of 7.6% will look even better if the Bank of England cuts interest rates next month.

Should you invest £1,000 in Rightmove right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Rightmove made the list?

See the 6 stocks

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Harvey Jones has no position in any shares mentioned. The Motley Fool UK has recommended Rightmove. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

One English pound placed on a graph to represent an economic down turn
Investing Articles

FTSE shares: a once in a blue moon chance to get rich?

Christopher Ruane explains why he thinks hunting for blue-chip FTSE bargains in the current market could help an investor build…

Read more »

Businessman hand stacking money coins with virtual percentage icons
Investing Articles

4 stocks Fools have bought for growth and dividends

Sometimes, an investor doesn’t have to make the choice between buying a growth stock or dividend shares! Some investments offer…

Read more »

Rolls-Royce's Pearl 10X engine series
Investing Articles

Is there no limit to how high Rolls-Royce shares might go?

Christopher Ruane sees some reasons Rolls-Royce shares could continue pushing upwards. But is he persuaded enough about the potential value…

Read more »

Businessman hand flipping wooden block cube from 2024 to 2025 on coins
Investing Articles

How much could £20k in a Stocks and Shares ISA be worth in 2030?

UK investors have enjoyed spectacular returns in their Stocks and Shares ISA's over the past five years. Would could the…

Read more »

Passive and Active: text from letters of the wooden alphabet on a green chalk board
Investing Articles

Is the FTSE 100 good for passive income?

Our writer considers whether investing in the UK’s largest listed companies could help generate generous levels of passive income.

Read more »

piggy bank, searching with binoculars
Investing Articles

Here’s the growth forecasts for International Consolidated Airlines (IAG) shares through to 2028!

Shares of International Consolidated Airlines (LSE: IAG) have risen following a strong set of first-quarter financials last week. Is the…

Read more »

DIVIDEND YIELD text written on a notebook with chart
Investing Articles

These 10 FTSE income stocks could generate £33,137 a year in dividends

Our writer looks at the highest-yielding income stocks on the FTSE 350 and considers what level of return they might…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

What to do now before the next stock market crash

The recent stock market volatility seems to have subsided… for now. But that gives investors a chance to get ready…

Read more »