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(Sharecast News) - In her 'Inside the City' column for the Sunday Times this week, Sabah Meddings focussed on housebuilder Bovis, opening with the March quip from new chief executive Geoff Fitzgerald that the company had got its "mojo" back.
At the time, Fitzgerald said problems such as poor quality construction and bribing people to move into unfinished homes were a thing of the past.
That was then backed up by the firm's trading update earlier in November, with Bovis saying it was on track to reach record profits for the year, with customer satisfaction topping 80%.
But that sunshine did come with a bit of cloud, with the company claiming ongoing uncertainty around Brexit had put a lid on demand from discretionary buyers, and part-exchange transactions, in which a customer uses their existing home as a part-payment, increasing to 15% of all sales at the end of June, up from 8%.
Shares in Bovis have slumped 27.5% since reaching a peak on 17 May, finishing at 959p on Friday, although Meddings noted that it was a trend seen among the other listed housebuilders as well.
The stock going south was in contrast to the way the books were looking at Bovis, however, with analysts picking pre-tax profits of £165m for the year ending 31 December, up from £121m in 2017.
Bovis said it had net cash of £42.8m on 30 June too, swinging from net debt of £32.4m 12 months prior.
Meddings noted that the firm was trading on an implied dividend yield of 9.4%, given its sliding share price and generous distribution policy.
The company is expected to distribute a total of 102p per share for 2018, including a 45p special dividend.
Outspoken venture fund manager Neil Woodford was baited by the "attractive" dividend yield too, saying he believed the housebuilders would see volumes, prices, profits and cash all head north, with the listed housebuilders trading on "ludicrously cheap" valuations.
Woodford also suggested Bovis could be a candidate for a large merger in the sector, having been approached by both Redrow and Galliford Try last year.
Still, Meddings said the fantastic yield implied a disconnect between what analysts were expecting and what the market thought of the shares.
Housebuilders are intrinsically tied to the economy's performance and consumer confidence, with a combination of political wrangling and the perceived likelihood of a hard, disorderly Brexit slashing 7.2% of Bovis' share price in a single day in November.
Its shares were also still being supported by the Government's Help to Buy scheme, which is expected to keep going until early 2023.
"How long can this market disconnect continue?," Meddings asked.
"With the dividend, investors are in effect feasting off last year's story of a housing market on steroids.
"All good things must come to an end. Avoid."
Over in the Mail on Sunday, Joanne Hart was also writing of "twitchy" markets and uncertain economic conditions in her 'Midas' column, but claimed industrial floor producer James Halstead was one thing that could be considered strong and stable.
She said the 42-year-old AIM-traded firm should see its share prices rise from their current 372p, as it expanded into new markets and consolidated its position at home in the UK.
Hart also pointed to the firm's "steady flow" of dividend payments, with 13.9p set down for this year and 14.3p anticipated in 2020.
The firm operates in a sector once that once churned out nothing but hard-wearing, ugly products, but Hart said that has now changed with Halstead producing anything from plain, functional floors to the decorative and the deluxe, reflected by a client list that ranges from Wetherspoon to Chanel.
It also has a hand in a number of specialist markets, including anti-static flooring for data centres and munitions factories, and tiles designed to help those with dementia feel safe.
James Halstead's manufacturing has also moved home in recent years, with 70% of its production coming out of its Radcliffe and North Yorkshire plants, while on the sales front, 70% of its sales are generated from export orders.
Hart also suggested the company was in safe hands, with finance director Gordon Oliver being in his role for 20 years and with the company for 30, steering the company through thick and thin and maintaining a focus on its strong balance sheet and decent dividends.
Looking ahead, James Halstead was looking to expand its market share in South America, India and the rest of Asia, with Hart calling its progress so far "encouraging".
It was also apparently thinking of its environmental future, too, recycling vinyl into new products to reduce its reliance on raw plastic materials.
Analysts were expecting a 2% improvement in sales this year to reach £255m, with profits growing 9% to £50.8m.
"Industrial flooring has come a long way since James Halstead first set up shop," Hart wrote.
"Today, businesses are keen to use vinyl that is well-priced, easy to use and can even look good."
Joanne Hart said Halstead was a beneficiary of that trend.
"The company is sure and steady, rather than fast and furious.
"But its track record speaks volumes. At £3.72, the shares are a buy."
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