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Michelmersh is an ideal stock: yield, growth and IHT qualifying

Stack of bricks made by Michelmersh

Established in 1997, Michelmersh Brick Holdings (LON:MBH) comprises six of the UK’s premium brands of bricks, pavers and bespoke terra cotta products. More recently it also acquired its first businesses overseas, bringing a Belgium based manufacturer into the fold. This IHT qualifying company ticks many boxes for investors, including a high yield a low price-to-earnings-to-growth ratio. 


Boring bricks in high demand

The UK has been prime territory for brick making since timber framed houses were banned in the wake of the Great Fire of London. From 1666 onwards, brick has been the construction material of choice in England, while an abundance of clay means the country is well suited to production.

Meanwhile, the dire state of the UK's housing market means those bricks are in high demand. In 2018, Heriot-Watt University concluded that England has a backlog of 3.9m homes, meaning 340,000 new homes will need to be built each year until 2031 - a significantly higher number than the government’s current target of 300,000 homes annually. The National Association of Estate Agents thinks brick shortages have been a contributory factor to the lack of houses and subsequent rising house prices, meaning regulators are very supportive of extensive brick manufacturing. The upshot is that the market for UK based brick producers is booming.

Our previous research ‘UK Housebuilders: bargain or…

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