Stephanie Link, Chief investment strategist, Hightower D R Horton Inc. DHI-N BUY Jan 23, 2023

Sometimes momentum works. Balance sheet is strong, home inventories are weak, and fundamentals are strong overall. Add to this cheaper capital/lower rates. The outlook looks good.

They reported last week: orders were up a lousy 1%, not 9% as expected, but gross margins expanded 50 basis points to beat expectations and added more buybacks. Trades at 12x PE.

A decade-long theme, not short term is in housing, if interest rates fall from 6.7% to 5.5% (likely in 2025). She likes DR Horton, but it's up 87% the past year, though is cheap now and gross margins are good.

Is up 25% this year. Likes it for lower interest rates, and their homes are affordable (70% of their homes cost under $400,000) during a housing shortage.

Is building a base now after a monster move higher, breaking above $200. Their uptrend is cooling down, but their Chaikin Moneyflow remains strong. After going sideways, Lang predicts this will hit $250-275 in 2025.

It rallied today, perhaps in reaction to Harris promising $25,000 to anyone buying a house if she wins. Lennar also rallied.

Is -7% this year. It's all about 30-year mortgages above 7%. 69% of their delivered homes this year were below $400,000. But it's a tough hill to climb with these high rates.

The homebuilders were in a tough spot entering this year, because of higher interest rates. Also, 13% of the construction industry consists of undocumented workers. If Trump cracks down on such workers, these will drive up labour costs and home prices.

It hit a new low. 69% of their homes cost under $400,000, so they appeal to first-time homebuyers. This is wait and see.

She added more, because it got so cheap at 9x forward PE. She expects housing to rebound. In fact, Home Depot saw its first positive comp in 8 quarters.