Britain's house builders have been riding the wave of another boom. Low interest rates and huge amounts of government support, such as the Help-to-Buy scheme have been kind to them over the last couple of years. But now the housing market is starting to cool.
Last week, Bellway (LSE: BWY)said that conditions were returning to more normal patterns. The company is doing well, with reservations slightly ahead of this time last year, and it's set for another good year of increased profits.
So how much better can things get for companies like Bellway? The company reckons its profit margins will be around 20% in 2015, which would be more than it was able to achieve during the last boom a decade ago.
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Its share price is at similarly lofty levels. At 1,837p,it trades on nearly 1.7 times net asset value, which is very expensive compared to the past 20 years.
Profits could stay high for a while yet given that Bellway has been buying land at good prices. But one day, the housing market will head south again Bellway's shares don't reflect that risk.
Verdict: take profits
Phil spent 13 years as an investment analyst for both stockbroking and fund management companies.
After graduating with a MSc in International Banking, Economics & Finance from Liverpool Business School in 1996, Phil went to work for BWD Rensburg, a Liverpool based investment manager. In 2001, he joined ABN AMRO as a transport analyst. After a brief spell as a food retail analyst, he spent five years with ABN's very successful UK Smaller Companies team where he covered engineering, transport and support services stocks.
In 2007, Phil joined Halbis Capital Management as a European equities analyst. He began writing for Moneyweek in 2010.
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