Todays full-year results from Persimmon (LSE: PSN) are impressive and show that the company continues to make encouraging progress. For example, underlying profit before tax is up 44% versus 2013, with an increase in sales of 23% and a much higher underlying operating margin of 18.4% (versus 16% in 2013) having a major impact on the companys bottom line.
Furthermore, Persimmons future also looks bright, despite there being understandable uncertainty regarding the General Election in May. For example, it acquired a further 26,822 plots of land in 2014 and has generated forward sales of 1.49bn, which is an increase of 5% on 2013s figure.
And, as evidence of Persimmons strong performance and its optimism regarding the medium to long term prospects for the business, the next instalment of its capital return plan will take place on 2 April rather than 6 July, with 95p per share (5.7% of its current share price) due to be returned to shareholders.
Looking ahead, Persimmon is forecast to increase its bottom line by 17% in the current year, and by a further 13% next year. Given that it trades on a price to earnings (P/E) ratio of just 11.4, this indicates that it offers very strong growth prospects at a highly appealing price, since it has a price to earnings growth (PEG) ratio of just 0.7.
However, there is also great value elsewhere in the house building sector. Thats because the likes of Taylor Wimpey (LSE: TW) and Bellway (LSE: BWY) are also in the midst of strong profit growth and, like Persimmon, trade on very appealing PEG ratios of just 0.7 and 0.8 respectively.
Likewise, Berkeley (LSE: BKG) also has a relatively attractive PEG ratio of 1.1 and, while it could be hurt somewhat by an apparent slowdown in the price of prime London property (owing to the recent change in stamp duty), it still seems to be well-worth buying at the present time. Similarly, Barratt (LSE: BDEV) has a PEG ratio of just 0.5 which, based on a very upbeat forecast for the current year (its bottom line is expected to rise by 38%), it seems to be the best value of the five companies.
However, what separates Persimmon from its sector peers is the appeal of its capital return plan. Certainly, this is not unique, but it means that Persimmon is set to return at least 475p per share over the next six years. This works out at 79.2p per year, which equates to an annual dividend of 4.8%.
And, with a number of the payments likely to be higher than are currently pencilled in (especially if interest rates remain low and trading conditions remain buoyant), Persimmon could prove to be an excellent income, growth and value play.
As such, and while the likes of Taylor Wimpey, Bellway, Berkeley and Barratt are also great stocks, Persimmon still seems to be the pick of a highly lucrative sector for long term investors.
Of course, finding the best stocks in any sector is never an easy task – especially if, like most private investors, you lack the time to trawl through the index looking for them.
That’s why The Motley Fool has written a free and without obligation guide called 7 Simple Steps For Seeking Serious Wealth.
It’s a step-by-step guide that could make a big difference to your investment returns and could mean that 2015 and beyond is an even more profitable period for your portfolio.
Click here to get your copy of the guide – it’s completely free and comes without any obligation.
Get FREE Issues of The Motley Fool Collective
Get straightforward advice on whats really happening with the stock markets, direct to your inbox. Help yourself with our FREE email newsletter designed to help you protect and grow your portfolio wealth.
By providing your email address, you consent to receiving further information on our goods and services and those of our business partners. To opt-out of receiving this information click here. All information provided is governed by our Privacy Statement.