Investing in the UK housing sector can be a risky venture, but with Vistry (LSE:VTY), there might be a hidden gem worth exploring. Despite recent challenges faced by the company, it seems like the best value proposition at the moment, especially with a massive drop in stock prices in recent months.
So, what exactly is going wrong with Vistry? Well, the company has experienced delays in some of its projects, leading to a reduction in expected pre-tax profits for 2024 from £300m to £250m. This is not the first time Vistry has faced issues in recent months, with an increase in costs in one of its operating divisions adding to the mix.
However, the silver lining for Vistry is that these setbacks seem temporary. Most of the delayed transactions are simply postponed to 2025, offering hope for a swift recovery. Moreover, an independent investigation has revealed that the problems are confined to one division, easing concerns for potential investors.
Unlike other UK housebuilders, Vistry’s unique model of selling to Local Authority Providers, Registered Providers, and the Private Rented Sector shields it from the cyclicality of the housing market. Reaffirming its commitment to returning £1bn to investors, Vistry’s share price drop presents an enticing opportunity for a substantial payout.
Nonetheless, the biggest risk looming over Vistry and its peers is the ongoing investigation by the Competition & Markets Authority into potential collusion on pricing. The uncertainty surrounding the outcome of this investigation adds another layer of complexity for investors evaluating the risk associated with the stock.
Personally, I find Vistry shares appealing at their current price levels. With the stock dipping below the £6 mark, I see potential for significant gains in the future. While delays in project completions may be concerning, the prospect of transactions carrying over to 2025 doesn’t deter my interest in purchasing Vistry shares. As I plan to buy the stock in January, I urge investors to consider this opportunity for themselves.
Leave feedback about this