Thursday newspaper share tips: Barratt Developments, Forterra

8th Sep 2016 14:13

(ShareCast News) - Concerns regarding Barratt Development's strategy and exposure to the high-end of the London market are overdone, The Times's Tempus said.The lack of a land bank was a conscious choice by management, which decided to pursue a higher margin business model, although in uncertain times it may look like a disadvantage.Similarly, while the property developer did lower guidance for profits from its joint-venture business in the high-end London market, it has other attractions which more than offset that negative, according to Tempus.For starters, 30% of its sales are supported by the government's Help-to-Buy scheme.Indeed, Barratt said that trading in the weeks since Brexit had been "business as usual" in terms of reservations and forward sales.So the London market aside, trading is "solid".Longer-term, the undersupply of homes is "huge", the company said."Simple economics dictates the UK's biggest housebuilder benefits from such a situation," Tempus mused.'Buy', the fundamentals of a supply shortage, a los-cost mortgage market and a dividend yield of 6.7% means this is a solid stock, the tipster concluded. Shares in brick-maker Forterra havbe receovered much of their post-Brexit drop, but builders' merchants were still sitting on big stocks of excess bricks, Tempus pointed out.Given that there was also little expectation of a rapid recovery until the Brexit mists began to clear, the outlook was bleak.Nonetheless, in good times the business, even when unglamorous, could deliver reliable, chunky pay-outs for shareholders.Britain's chronic shortage of homes was a fundamental advantage, as Forterra chief Stephen Harrison, correctly pointed out."Tough to see why shares are a buy in present market," but 'hold', Tempus said.