George Obsorne announced a furtjher boost to UK housing market, offering first time buyers a help to buy ISA – the scheme can pay anything between 400 and 3000 pounds from the government…
This seems a bit a of an election gimmick – given the cost of houses today – and reflected in the very modest rally in UK Housebuilder shares…
The real risk for holders of UK Housebuilders is the Tories losing the general election and the next government scrapping all the help to buy schemes – could see a 20% drop in the shares if this happens.
$BDEV FV = 520 4.25% Dividend Yield
$TWOD FV = 180 6% Dividend Yield
Taylor wimpey still cheap to Fair Value, but would not buy ahead of the election unless you are sure the tories will win.
If you have a core position, hold for now – the tories have a lead in the polls, but it this changes trim your position.
2CentView has a core position in $TWOD (Taylor Wimpey)
reckons that the Help to Buy scheme could be cut short if the Cameron loses the election.
$BDEV = 450 (from 425)
$TWOD = 135 (from 125)
Look to take some profit around these levels but keep a core position for now – they still have great yields and have done very well this year both up over 20% this year with dividends and capital returns.
Be careful as we come up to the next general election as there is a risk the help to buy could be cut if the tories lose.
2CentView has a core position in $TWOD.
$BDEV FV = 420 (Barratt)$TW. FV = 125 (Taylor Wimpey).
These were on a high following governments extension of the Help to Buy Scheme, but the prospect of higher rates sooner has seen a sell off!.
Higher rates sooner rather than later, should see a flattening of the yield curve in the 3-10Y area, which is good for housing market long term and should see lower 5Year fixed rates.
Barratts report 12th may – may be worth a margin trade in the hope for some good numbers.
Buy here at 350, Take Profit target 400, Stop 320.
profit on second part of strategy if spread bet
$BDEV (barratt dev)Keep a core position of between 50% and 25% if you like the company long term. 2Centview is quite bullish on UK Housing stock (have been long $TWOD for 2 years now from low 40s).
if spread bet then close out at 380/385 area but not lower.
FV on $BDEV=390. However, there is chart resistance at 340 so would take half profit at 340 and look for break out above this level towards 380. So fast money trade is as follows:
buy at 315
sell half at 340
Sell half at 380
Cut at 303
If you assume 0.5 probability of price reaching 305, 0.25 at 340 and 0.25 380 your risk reward ratio on the trade is
Profit= 25*0.25*.5 + 65*0.25*.5 = 11.25
Loss = 12*0.5 = 6
So just under 2:1
Good one for a Spread Bet
As for your question on stocks <100 – again PRICE Should not be factor when buying stocks – we think that when buying penny stocks we buying something cheap! But it is better to buy NEXT at 50 quid rather than Debenhams at 90p!
Chart Resistance on $BDEV at around 340. Take half profit here, set stop on remaining bet to 330, look for break out above 350 or if it goes the other way, look to re-enter trade at 315 area locking in gains from first trade.
FV=370. Housing markets stocks in US/UK under pressure. Higher ratres?
If you want to get involved, my pick is
$BDEV FV=390; Net debt now only 26m (from 167m), higher dividends to come