With the stock market near its all-time high, it's hard to find growth shares trading at a reasonable price. You can find some in the housebuilding sector, though. The shares of many big housebuilders, such as Taylor Wimpey and Persimmon, are currently valued at less than 10 times forward earnings. Some smaller players in the housebuilding scene may offer even better value -- a few of them are trading at even lower multiples on their expected earnings, while others may have superior growth prospects.
One such company is Newcastle-based Bellway(LSE: BWY), a geographically-diversified developer of traditional family homes and affordable apartments.
Last month, Bellway issued a trading update for the six months to 31 January 2017, which showed the group make a significant increase in both the number of legal completions and the value of the forward order book. Housing completions increased by 6.5% to 4,462, adding to the UK's much-needed supply of new homes, while its forward order book swelled 9.1% to £1,121m.
Bellway's share price has outperformed many of its peers and is now trading just below its pre-referendum high of 2,777p. The company has no doubt been helped by its limited exposure to Central London, where prices have remained sluggish since the Brexit vote of last June, and recent stamp duty changes.
Looking forward, Bellway is well placed to benefit from its accelerated pace of new home construction, as demand remains resilient outside of Central London despite the uncertain macroeconomic backdrop. As such, the group is seeing no let up in viewings. Meanwhile, its reservation rate increased by 6% on last year, to 166 homes per week.
With a forward P/E of just 7.8, Bellway trades at a noticeable discount to the sector average of 9.7. However, with a dividend yield of 4.0%, its shares don't offer as much in terms of income than many of its bigger peers.
Irish housebuilder Cairn Homes (LSE: CRN) is my pick for investors who are prepared to wait a couple of years. Cairn Homes listed on the London Stock Exchange only in 2015, and the housebuilder is still in the process of ramping up its construction activity.
The company today announced its 2016 full-year results, which showed an 11-fold increase in revenues to EUR40.9m on 105 unit completions. The company made a gross profit of EUR7.1m, up from EUR0.7m, with a gross profit margin of 17.3%. Operating profit was EUR3.6m, up from a loss of EUR3.8m in 2015.
Cairn Homes still has a long way to go before it generates significant profits, but the company is on target to meet its optimistic growth expectations. It expects to complete between 375 and 400 new homes this year, with the number of completions expected to climb to 850 units by 2018 and 1,200 units by 2019.
Moreover, Cairn Homes benefits from favourable fundamentals, as residential property prices are forecast to grow even more robustly in Ireland than in the UK in 2017. The Irish market is set to benefit from a number of bullish tailwinds over the next few years, such as the newly-introduced help-to-buy scheme, the recent relaxation in the Central Bank lending limits and the constrained supply of new homes since the housing crash of 2007.
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Jack Tang has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.