Builder lifted by Generation Brexit
MJ Gleeson is a strong business that is growing stronger. Originally recommended by Midas in December 2011 at 104p, the shares had risen to 570p by last March and today they are 612½p.
The company unveiled robust half-year results last month, accompanied by a 44 per cent increase in the interim dividend to 6.5p – a real expression of confidence about its prospects.
This optimism is well placed. Gleeson specialises in building affordable homes in the North – homes where monthly mortgage payments are cheaper than council house rent. Demand for these properties is so great that queues form round the block every time Gleeson opens a new site.
The company has even begun to bring in burger vans, providing bacon sandwiches for wouldbe homeowners.
Customers tend to be low-earning couples in their 20s, around 70 per cent of whom voted for Brexit in last year’s referendum. Chief executive Jolyon Harris, who spends time on new sites, says sentiment is noticeably more upbeat following the vote to leave the EU, particularly as economic growth remains rela-
AS BUSINESSES, individuals and economists assess last week’s Budget from Chancellor Philip Hammond, Midas looks at three past tips – and considers their prospects.
tively strong and wages are starting to rise.
Gleeson is expected to build about 1,000 new homes this year and hopes to i ncrease that number to 3,000 over the next few years, moving as far south as Northampton and the north of East Anglia. The Government’s White Paper on housing, released last month, should help that ambition, as it broadens the definition of affordable homes, which should simplify planning applications.
Profits for the year to June are expected to go up by 9 per cent to £30.3 million, rising to £33million next year. The annual dividend is likely to show a 34 per cent increase to 19.5p, moving up to 21.3p in 2018. Over the longer term, profits should increase materially as Gleeson builds more homes.
Midas verdict: Gleeson shares have proved a rewarding investment over the past six years, but the company should continue to deliver. Shareholders should hold on to their stock, while long-term investors could also see value in these shares. Traded on: Main market Ticker: GLE Contact: mj.gleeson-homes.co.uk or 0114 261 2900