Bellway (Q3 trading statement 12 June)
Bellway continues to do well, as exemplified in its first-half results recently. A higher level of demand for bricks and tiles has hit the pace of construction, while the fall in the value of the pound has also boosted the cost of imported materials. Still, the firm expects a record number of completions for its full-year, and the 7.7 forward price to earnings (PE) ratio and 3.9% yield versus a 2.3% payout for peers continue to boost the attractiveness of the shares.
Bellway shares have rallied sharply off the lows of the week around £32.20, and are now pushing towards the £34.40 area that stalled progress in May. This would also bring them into contact with trendline resistance from the October high, so we are at a fairly crucial point. A break towards £35.00 would likely see further momentum develop over the longer term towards £37.00, and mark a more bullish turn after eight months of declines. A failure would see a move back towards £32.50, but a break of rising support from the March lows needs a close below £32.00.