Stock of the day 01/07/2015 – Persimmon PLC

The post-crisis landscape was tough for the property sector, but Persimmon has recovered better than most; the housebuilding company announces its Q2 2015 trading statement on Thursday.

Since the understandable decline post-crisis, culminating in a £2.07 nadir at the end of 2008, Persimmon has begun to have a bit more fire in its belly, and from 2012 onwards has posted significant market gains each year. The pace may have slowed slightly in 2014, going from £12.43 to £15.74 across 12 months; in 2015, however, the stock has regained its muscular momentum. After quickly hitting a mid-January low of £14.28, by the start of February the stock was back to £16. News at the end of the month that pre-tax profit had jumped by 40% to £467 million in 2014, complimented by a 23% rise in revenue to £2.6 billion, then took Persimmon above its end of 2006 all-time high to £17.95 at the start of March.


(Source: IT-Finance.com 01/07/2015)

Post-peak declines carried the stock back down to £16.50, and a minor rally at the end of April was wiped out in the jitters going into the UK election. However, come May 8th, and a convincing victory for the Conservatives, Persimmon, like so many stocks, surged by 5.6% to £17.46. The company continued to bask in the post-election calm, and the Tories right-to-buy initiatives, across May to hit £19.45. Investor shied away from taking it above £20 at the start of June, but news on Persimmon’s pipeline of new builds pushed it to a high of £20.71 towards the end of the month. It has a current trading price of £20.33 (IT-Finance.com, 01/07/2015).

The company’s last trading update back in the middle of April saw a 7% year-on-year increase in revenue to £2 billion for the first 15 weeks of 2015, alongside a 4% rise in average selling price to £207,900, reflective of the red hot housing market at the moment. It is this latter point that should maintain Persimmon’s growth for now, leaving the company with a consensus rating of ‘hold’ with an average target price of £18.01.

Wednesday’s stock news:

After a truly abysmal run since mid-2013, there were finally signs that the ship might be turning around at Serco Group this morning, as the outsourcing company posted a £90 million full year operating profit, a vast, vast improvement on last year’s £1.3 billion in losses. The news was welcome relief to Serco investors, and the stock soared by over 8% to £1.28; not far off its lows, but a start.

The reaffirmation of its ‘buy’ rating by Jefferies Group gave Just Eat investors plenty to chew on and they liked what they tasted, pushing the fast-food service up by just shy of 7% to a 4 week high of £4.35.

The news that the Airports Commission has backed a third runway at Heathrow was a massive boon for easyJet this morning, as the orange airline announced it would create a base at the airport, despite the company being Gatwick’s biggest customer. This led to a bit of a take-off for easyJet’s stock, which jumped by nearly 4%, and away from its recent lows.