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Bellway (first-half earnings 21 March)
Like many housebuilders, Bellway remains fundamentally cheap by historic standards. Concerns over a slowdown in demand hit the sector in 2016, but so far this has not come to pass. Much will depend on how the UK economy fares during Brexit negotiations, but for the time being the outlook is relatively robust.
A recent six-month trading update saw completions rise 6.5%, while the forward order book was over 9% higher at £1.12 billion. At just 8.1 times forward earnings, the shares continue to look almost absurdly undervalued, even if the yield is slightly below the rest of the sector. Early February saw Bellway shares break the falling trend that had held sway since late 2015. With much of the good news probably in the price, we may see a fresh pullback, but the steady progression of higher highs and lows remains intact, unless it breaks back below £25.40. Currently the next real target is the all-time high at £28.83.
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