I believe two UK shares could double my money in 2022 if I added them to my holdings. Both of these stocks are well known house builders. Let’s take a closer look at them.
The demand for homes is set to outstrip supply for many years to come. House builders are working around the clock to build new homes and they have no problem selling them. Furthermore, current house prices are high and showing no signs of stagnating or dropping just yet. The good news here is that barriers for purchasing homes have never been lower for buyers. Although interest rates have risen, they are still low enough to give many buyers access to good mortgage rates. In addition, there are plenty of government backed Help to Buy loans to assist first time buyers.
UK share #1
My first pick is Persimmon Homes (LSE:PSN). As I write, the shares are trading for 2,573p. This is a 3% drop from this time last year when the shares were trading for 2,650p. The shares have dropped this week as the UK government announced house builders and developers should fix the cladding crisis. All house builders and property firms listed have seen shares drop due to this.
Persimmon still stands out as a potentially lucrative UK share for me to add to my portfolio. Today’s trading update signified the strength of Persimmon’s recent performance as well as future prospects too. The update covered brief final year results for the year ended 31 December 2021 before full results are published in March. The number of houses completed, average selling price, group revenue, net cash, and dividend per share all increased compared to 2020 levels. I believe 2022 could be an even better year.
Persimmon shares are not risk-free, however. The recent supply chain crisis as well as rising costs of material and HGV driver shortages could impact operations and performance. In addition to this, the house building market is saturated and competition is intense too.
Overall, I believe Persimmon could double my money in 2022 and I would add the shares to my holdings. The market outlook is favourable and to add a nice cherry on top, Persimmon has a dividend yield of almost 9%! At current levels it looks cheap too with a price-to-earnings (PE) ratio of just 11.
My second pick is Bellway Homes (LSE:BWY). As I write, the shares are trading for 2993p, which is a 2% increase from this time last year. Bellway’s shares have also dropped slightly this week after the cladding announcement.
I believe Bellway is one of the UK shares from the house builders out there to have benefitted the most from recent favourable conditions. Bellway released full-year results for the period ending 31 July back in October. Profit increased by over 100% and revenue increased by over 40%. I am also buoyed by the fact that insiders are buying shares.
Bellway also has risks and these are all very similar to those that Persimmon faces, noted above. Rising costs, supply chain issues, and HGV driver shortages could affect performance in 2022.
Overall Bellway is another UK share I would add to my holdings to attempt to double my money in 2022. It has a dividend yield of just under 4% and looks cheap with a P/E ratio of just over 9.
Jabran Khan has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2022