Ibstock Share Price Forecast December 2021 – Time to Buy IBST?

Shares of leading manufacturer of clay bricks and concrete products Ibstock (LSE: IBST) are in the red today after closing at £192.3 as of November 30^th (18:09 GMT). With the pandemic starting to get under control increased demand has seen Ibstock being talked about in trading forums recently.

Ibstock – Technical Analysis

The financial statement from Ibstock indicates that the market cap of the company is at £78.772 billion and total assets worth £69.732 billion. Revenue for 2020 was at £31.62 billion with a profit margin of -8.86% compared to £40.93 billion in 2019.

Oscillators for Ibstock such as Relative Strength Index (14)(40.5), Stochastic %K (14, 3, 3)(17.7),  Commodity Channel Index (20)(−160.4) and Average Directional Index (14)(16.7) are all neutral. On the other hand, moving averages for Ibstock such as Exponential Moving Average (10)(197.5),  Simple Moving Average (10)(197.8),  Exponential Moving Average (20)(198.7), Simple Moving Average (20)(200.0) and Exponential Moving Average (30)(199.7) are indicating a sell action.

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Recent Developments

As a leading manufacturer of brick and concrete products in the UK for the past 200 years, Ibstock is one of the largest brick manufacturers in the UK, with 36 manufacturing sites throughout the UK which employs over 2,000 people. Despite the pandemic, the UK has seen a construction and housing demand boom. While most UK shares of the construction industry have benefited from this, some of the companies look cheap or beaten down due to several macroeconomic pressures of late. The company released their Q3 trading update at the beginning of November which confirmed that demand for its products remained strong. It has made a decision to invest £50 million in a new state of the art factory. It hopes to deliver growth by leveraging a combination of both organic and inorganic investment.  The project is expected to be completed within the end of 2023 after which it will be capable of producing up to 60 million brick slips per annum.

The UK market experienced an initial freeze on purchases during the first lockdown after being replaced by a buying frenzy. Prices reached record highs aided by the government’s stamp duty holiday, which officially ended on 1 October. There are signs that the demand for bricks will remain robust. DIY-related expenditure should remain favourable thanks to the colossal level of savings accrued during Covid-19 lockdowns. With the government supporting first-time buyers, it should provide plenty of incentive for the housebuilders to keep operating too. Back in its August update, the company said that it expected a full-year EBIDTA to be above expectations after delivering a 54% increase in revenue between January and June.

Should You Buy IBST Shares?

Investors interested in Ibstock should consider a few risks. The company could experience a dip in sales caused by worsening economic conditions. This could result in decreased housebuyer confidence and prompt consumers to tighten their expenditures. But the ultra-low share price is an indication that these factors are already built into it. Other macroeconomic issues such as rising interest rates, the end of stamp duty, rising cost of materials, and a looming supply chain crisis will affect housebuilders, and suppliers like Ibstock as well.

But despite the current economic situation, Ibstock shares could be worth adding to your portfolio in the long run. At current levels, it is definitely a stock that can’t be missed. The company still continues to grow, possesses an excellent market share in its sector and has a long history of success. The company also pays a dividend for passive income generation.

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