Barratt Developments has just had its best spring selling season for five years. Not much to boast about, might be the cynical response, given what's happened since 2007. Even so, with reservations up 25 per cent on the year and its shares still selling for less than half their underlying asset value, we reckon it's time to switch our recommendation on Barratt's shares to a buy.
IC TIP:
Buy
at
134p
Tip style
Value
Risk rating
Medium
Timescale
Long Term
Bull points
- Shares trade at half asset value
- Solid forward sales
- Strongest Spring selling for 5 years
- Profit margins improving
Bear points
- No dividend yet
- Housing market still vulnerable
True, Barratt once epitomised the worst excesses of the UK's house-building bubble that burst in 2007. The following years of painful adjustment meant Barratt's asset base was battered with huge writedowns on its land bank, while shareholders were tapped for a rights issue and said goodbye to dividends.