McCarthy & Stone and Ferguson
Archived article

Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.

“Global stocks repeat the pattern seen yesterday with declines across numerous markets amid growing fears about trade war tensions between the US and China. The FTSE 100 slips 0.7% to 7,578 with miners among the worst hit. Stock markets in Europe and Asia are also in the red,” says Russ Mould, investment director at AJ Bell.

McCarthy & Stone

“You may have thought a housebuilder specialising in properties for people in retirement would be a simple, steady growth business. However, today’s profit from McCarthy & Stone would suggest this activity is not bulletproof.

“Customers are being more cautious and prices are falling, particularly in the South East. Visibility is poor over the type of profit margins and returns the group can achieve in the near-term.

“McCarthy & Stone is no stranger to trading setbacks since it joined the stock market in November 2015. For example, in September 2016 it flagged fewer reservations since the Brexit vote that year and higher cancellation levels.

“Housebuilders have dominated the headlines over the past five years or so, thanks to very generous dividends and churning out hefty profits. McCarthy & Stone’s situation, even though it only operates in a niche part of the market, is a stark reminder that housebuilders aren’t immune from problems in the bigger world.”

Ferguson

“The FTSE 100 plumbing and heating products group previously known as Wolseley continues to produce solid numbers with organic revenue growth staying above 7% for the fifth consecutive quarter.

“One of the most encouraging points about its latest trading update is ongoing strength in the US where it continues to gain market share.

“Some investors have been worried about increased competition in the plumbing and heating products distribution space from Amazon. However, Ferguson is clearly capable of fighting off this competitive threat judging by its latest performance.

“Tradesmen work hand-in-hand with Ferguson before submitting a bid for a project, so the FTSE 100 constituent tends to have very close relationships with its customers. That can give it a market advantage over Amazon.”

These articles are for information purposes only and are not a personal recommendation or advice.

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The daily market update is written by Russ Mould, AJ Bell’s Investment Director and his team. The article highlights the movement in the main index, winners and losers on the day and any macro-economic announcements.