Opinions
The Panic-Proof Portfolio (Stockchase Research)
Lennar Corp.
LEN-N
TOP PICK
May 02, 2024
Stock price when the opinion was issued
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We reiterate LEN as a TOP PICK. Earnings will be reported next week, so we will recommend keeping a tight stop at $149, looking to achieve $180 --upside potential of 16%. This will be a good indicator of the US home building market. It trades at 11x earnings and under 2x book value, while supporting a 15% ROE. Yield 1.0%
(Analysts’ price target is $180.35)They report Monday. Housing the linchpin of the economy and prices keep climbing. We need to hear if they will build more homes or keep the supply so tight that housing prices won't come down. The buildings are limiting supply to keep gross margins up and prices up, but it's terrible to fight inflation. Housing stocks have hung up because we have a housing shortage, but how long can this last when we see pushback on the prices of other items like dining out, apparel and airline tickets, all of which have risen dramatically in the last 5 years.
Our PAST TOP PICK with LEN has triggered its stop at $149. To remain disciplined we recommend covering the position at this time. This will result in a net investment gain of 2%, when combined with our previous buy recommendations.
Still holds. Last month brutal for homebuilders. Though interest rates drifting lower, clear that won't be going as low or as fast as the market first thought. So the interest-sensitives are being punished. Yet mortgages are going up, somewhat negative for homebuilders.
Long US mortgages cause resale market to dry up, but will eventually force home buyers to homebuilders. He's looking closely to see if this is an opportunity to increase his holding in homebuilders.
Lennar Corp. engages in the provision of real estate related financial and investment management services. It operates through the following segments: Homebuilding, Financial Services, Multifamily, and Lennar Other. The Homebuilding segment refers to the construction and sale of single-family attached and detached homes and the purchase, development, and sale of residential land directly and through entities. The Financial Services segment focuses on mortgage financing, title, and closing services for buyers. Social media mentions are up 1467% in the past 24h.
We reiterate this Florida-based home construction company as a TOP PICK. Analysts continue to see a long runway of projects being run efficiently. Cash reserves are growing, while shares are aggressively bought back and debt is retired. It trades at 11x earnings and under 2x book, while supporting a 15% ROE. We continue to recommend a stop at $149, looking to achieve $180 -- upside potential of 15%. Yield 1.1%
(Analysts’ price target is $180.35)