As Rachel Reeves looks to renew Britain, here’s a FTSE 100 stock to consider

The FTSE 100‘s up just over 7% since last year’s UK General Election. And the latest update to the chancellor’s spending plans could be good news for a number of businesses.

The government’s set to allocate £39bn for affordable housing as part of its plan to build 1.5m homes in the next decade. And there are some obvious potential beneficiaries of this investment.

UK housebuilders

The most obvious way to invest in the growth of UK housing is by buying shares in a builder – and there are plenty to choose from. But I’m staying away from this industry for the time being.

Several FTSE 100 UK housebuilders are being investigated by the Competition and Markets Authority for potential anticompetitive practices. And this is set to continue until at least August.

The investigation’s been extended a couple of times and seems to be dragging on quite a bit. That’s frustrating from my perspective, because there’s at least one stock in this industry I’d like to buy.

I’ve no way of knowing what the outcome of the investigation will be though, and this is a big risk. It seems to be going under the radar of most investors, but I don’t think it can simply be ignored.

Home improvements

An alternative strategy involves looking at companies that supply the things that go inside houses. And the name that stands out to me at the moment is Howden Joinery Group (LSE:HWDN).

The firm supplies most things that go into kitchens – such as sinks, worktops, and cupboards – as well as joinery products and hardware. Unlike its competitors, it focuses on trade sales.

This is a big advantage because it allows Howden to operate out of warehouses rather than retail stores. This helps keep down costs and it also means customers generally know what they need.

As a result, the FTSE 100 company can charge less than its competitors while still maintaining wider margins. Over the long term, I think that’s an extremely powerful combination for any business.

More houses

Howden does supply products for new-build houses, but this isn’t its largest market. The real attraction of the government’s plans – as I see it – is the potential for increased long-term demand.

Over time, more houses should mean more things that need replacing and upgrading. And the firm’s strong competitive position should mean it benefits from this over time.

In terms of valuation multiples, the stock isn’t hugely expensive at the moment. That might reflect some of the key risks, which include inflation and changes in building safety standards.

Both of these are worth taking seriously and either could create issues for the FTSE 100 company. But I also think the government’s housebuilding plans might be very good for shareholders.

UK investing

As I see it, Howden Joinery Group’s distinctive business model gives it in a big advantage over other competitors. And the stock trades at what I see as a reasonable valuation at the moment.

With the UK government looking to invest in housebuilding in the near future, the market for kitchen and now bathroom products could be set to grow. I think this means the stock is worth a closer look.

The post As Rachel Reeves looks to renew Britain, here’s a FTSE 100 stock to consider appeared first on The Motley Fool UK.

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Stephen Wright has no position in any of the shares mentioned. The Motley Fool UK has recommended Howden Joinery Group Plc. 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.