Loads of people are overlooking how the UK Budget could be great for this growth stock

This week’s UK Autumn Budget promises policy measures that could help or hinder some growth stocks. Much coverage has focused on banking stocks and some of the major FTSE 100 housing companies.

However, there are other smaller stocks that could also be worth looking at. Here’s one that I think deserves more viewing time.

Brick by brick

I’m talking about MJ Gleeson (LSE:GLE). The housebuilder doesn’t attract anywhere near the same attention as FTSE 100 giants Persimmon and Taylor Wimpey. However, I think its focus on affordable housing makes it an interesting growth opportunity, particularly if the Chancellor announces measures to help first-time buyers.

The business specialises in building lower-cost homes, predominantly across northern England and the Midlands. Its business model is designed around helping people get onto the property ladder, rather than targeting wealthier buyers.

This could prove particularly advantageous given speculation surrounding a new government-backed first-time buyer scheme.

The proposed ‘Your First Home’ scheme could allow eligible buyers to purchase new-build properties with deposits of just 2.5%, alongside a government-backed equity loan of 20%. For someone struggling to save a deposit, this could make a substantial difference.

Given Gleeson’s relatively low selling prices, I think it could be among the biggest beneficiaries.

Other reasons to be positive

Of course, I can’t pin everything on the Budget. Fortunately, there are other reasons to consider buying the stock outside of what happens this week.

For example, Gleeson’s latest annual results showed revenue increasing 12.1% to £410m, with home completions rising almost 10% to 1,968. That’s encouraging considering the difficult housing market.

Admittedly, adjusted pre-tax profits fell sharply to £10.8m. However, I see this as a potential recovery opportunity rather than necessarily a sign of ongoing deterioration.

Management has completed its Project Transform restructuring programme, designed to improve operational efficiency and reduce costs. If housing demand recovers, these improvements could help deliver stronger profit margins.

The company’s land division also offers growth potential. It secured 13 new sites during the last financial year, strengthening its pipeline of development opportunities.

Small-cap risk

With a market-cap of £163m, Gleeson remains a relatively small business. This could put off some investors who prefer to only focus on larger companies. It’s true that small-cap stocks can be more volatile, but the rewards can also be higher than with mature alternatives.

Higher mortgage rates could keep demand subdued, while rising labour and material costs threaten profitability. The new government scheme might also be less generous than anticipated, particularly if developers are required to contribute significantly towards its costs.

Yet when I look at everything on balance, I do think it’s a stock that could do well from the Budget, and one that’s been overlooked. I don’t have much free cash at the moment, but if I did, then I’d consider buying the stock.

Should you invest £5,000 in Mj Gleeson Plc right now?

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Jon Smith has no positions in the shares mentioned.