Could Carillion plc outperform Purplebricks Group PLC, Persimmon plc, Taylor Wimpey plc and Berkeley Group Holdings PLC?

Does Carillion plc (LON:CLLN) (CLLN.L) have more investment potential than Purplebricks Group PLC (LON:PURP) (PURP.L), Persimmon plc (LON:PSN) (PSN.L), Taylor Wimpey plc (LON:TW) (TW.L) and Berkeley Group Holdings PLC (LON:BKG) (BKG.L)?

Carillion plc
Carillion plc

The Carillion plc (LON:CLLN) (CLLN.L) share price has fallen by as much as 77% so far this year. Obviously, it has been the subject of a disappointing update which included a profit warning, the resignation of its CEO and a suspension of its dividend.

In my view, though, the company has a sound underlying business. It has been able to win contracts of late and has the potential to cut costs in order to boost its bottom line.

However, I think the company’s shares may remain volatile, and I’d much rather buy a housebuilder such as Persimmon plc (LON:PSN) (PSN.L), Taylor Wimpey plc (LON:TW) (TW.L) and Berkeley Group Holdings PLC (LON:BKG) (BKG.L) at the moment.

I think with there being a shortage of housing in the UK, housebuilders such as Persimmon, Berkeley and Taylor Wimpey could see their profits rise over the medium term.

Alongside estate agents such as Purplebricks Group PLC (LON:PURP) (PURP.L), they may benefit from continued low interest rates. While there is talk in the press of a small rise in interest rates, I think the policy trajectory will still be towards ‘loose’, since risks to the UK economic growth rate remain.

Therefore, I think favourable trading conditions may remain in play for Purplebricks and for housebuilders such as Berkeley, Taylor Wimpey and Persimmon. This could help to improve their financial and share price performance in future, as well as lead to the prospect of higher dividends in the cases of the housebuilders in particular.

Although I feel Carillion could mount a recovery in the long run, it remains a high-risk stock in my eyes. I’d rather know more about its strategy and dividend prospects before I consider buying it for my own portfolio. That’s particularly relevant with the opportunity I see within the wider property sector at this moment in time.

About Robert Stephens 3883 Articles
Robert Stephens is a CFA Charterholder and an Equity Analyst by trade. He is a passionate private investor who has been buying and selling shares for many years, owning a wide range of UK shares in the process. He has written for Citywire and The Motley Fool US and now runs his own business. To contact Robert, please email [email protected] or use one of the other contact methods available on the 'Contact Us' page