2 top value stocks that could make you rich

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McCarthy & Stone

The UK's leading retirement housebuilder McCarthy & Stone(LSE: MCS) issued a trading update this morning reassuring the market that it is continuing to make steady progress in increasing its forward order book, despite the massive uncertainty created by last month's general election.

Upward momentum

Today's update covered the months from the beginning of March through to July, certainly a very eventful period from a political perspective, and somewhat challenging for the UK's leading housebuilders and property developers. Political and economic uncertainty is never a good thing when it comes to building an order book.

Nevertheless, the Bournemouth-based developer has seen upward momentum in average selling prices and margins since the beginning of March, reflecting an improvement in its sales mix which it expects to continue into the next financial year. Indeed, average selling prices exceeded £280k per unit, compared to £265k for the same period in 2016, with the total forward order book increasing by £241m since the beginning of March. Total forward sales including legal completions now stand at £659m, representing a significant improvement since the start of the current financial year.

Getting older

With demand for specialist retirement housing on the increase, I continue to be bullish on the group's long-term prospects. It's been estimated that the number of people aged 85 and over in the UK will more than double between 2015 and 2035 from 1.5m to 3.2m, with the number of people aged 65 and over expected to increase by more than 50% from 11.6m to 17.2m over the same period.

What I find most intriguing as an investor is that research suggests that although one in four over-60s are interested in retirement living, only around 141,000 units of specialised retirement housing have actually been built. Now that the election is over, I believe the market will look again at the investment potential of this mid-cap retirement specialist, and see that a P/E rating of just 10.7 clearly undervalues a company with such attractive long-term prospects.

Sales dip

Another London-listed firm reporting today was Topps Tiles(LSE: TPT). The UK's largest tile specialist saw its share price drop by up to 4% in early trading as it confirmed lower like-for-like sales in the third quarter of its financial year, but by late afternoon the shares had almost fully recovered as bargain hunters looked to take advantage of the dip.

The Leicester-based retailer reported a 4.7% dip in like-for-likes sales revenue for the 13-week period ending 1 July. It blamed weaker macroeconomic conditions and a tougher comparative with the previous year when the business benefitted from Stamp Duty changes which led to a surge in the number of housing transactions.

Despite the somewhat disappointing sales figures, I still see the company as a decent long-term investment. The shares are trading at a 20% discount to a year ago, and now look to be in bargain territory at just 10 times forecast earnings for FY2017.

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Bilaal Mohamed has no position in any shares mentioned. The Motley Fool UK 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.