The Ibstock (LSE: IBST) Shares have fallen 22% since the beginning of September, with investors worried about the potential impact of rising inflation on Bank of England policy and worrying about how it could hurt demand for bricks.
Naturally, raising interest rates will make the purchasing power of potential home buyers even more challenging. Comments from Bank of England staff suggest that a rate hike could come soon.
Michael Sanders, a member of the monetary policy committee that set the rate, said over the weekend that “In the last few months the markets have increased at the bank rate more than before and I think it is reasonable. ”
The recent fall in eBostock means it continues to trade at a forward price-to-earnings growth (PEG) ratio of 0.1. A reminder that any reading below 1 suggests that a stock is worthless by the market. The firm doesn’t just look like a dirty-cheap UK stock from an earnings standpoint.
For 2021 and 2022, FTSE 250 The stock carries a dividend yield of 3.3% and 4.4%, respectively. It loses the broad FTSE 250 forward average of 1.9% by a good margin.
Another cheap UK share on my radar
Concerns about the Bank of England’s potential rate hike (including concerns over the cost of additional building materials) have also shaken the share prices of many homeowners.
FTSE 250 quoted Belway (LSE: BWY) One of these recent casualties is 13% lower than at the beginning of September. But at current prices I think this is another UK stock that offers a brighter overall value. In addition to trading at a PEG ratio of 0.1 for 2021, Bellevue pays dividends at 3.5% for this year and 4% for 2021.
I thought both Belway and Ibstock provided excellent prices before the September-October sale-off. And following that, I believe these dirty-cheap UK shares can now be considered too cheap for me to miss. I certainly think their recent share price has fallen more than reflecting the fear of rising interest rates.
Still feeling good
From a long-term perspective, these two companies still have great potential for profit. Of course, the Bank of England rate could soon rise to their record 0.1%. But I still hope they stay at the bottom of their historic history. Otherwise it could suffocate the economic recovery as Britain faces twin problems with Covid-1 and Brexit.
On top of that, the home buyer’s affordability should be well supported by intense mortgage product warfare. Ever bidders are constantly leaning backwards with lower rates, cashback and other benefits to win business in a crowded market.
There are not enough homes to roam in Britain. Therefore, the government will have no choice but to continue construction to solve the crisis (the Ministry of Housing will build 100,000,000 new homes every year in the next few years). All things considered, I think the future is still looking bright for cheap UK shares eBostock and Bellevue. And I think they bought a good price for me after the recent share price fall.
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Coronavirus epidemic disrupts markets around the world …
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Ryston owns shares in Wild Ebstock. Motley Flowers UK recommends eBostock. The opinions expressed in the companies mentioned in this article may differ from those of the authors and therefore the official recommendations we make on our subscription services such as Share Advisors, Hidden Winners and Pro. Here at The Motley Flower we believe that considering a variety of insights makes us a better investor.