Stockchase Opinions

Jim Cramer - Mad Money Lennar Corp. LEN-N COMMENT Dec 13, 2024

It reports Wednesday. The housing stocks were hammered this weak about Toll Brothers reported a weak quarter and were downgraded. Also, mortgage rates remain stubbornly high.

$154.390

Stock price when the opinion was issued

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TOP PICK
Stockchase Research Editor: Michael O'Reilly

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)
WATCH

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.

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This is a Panic-proof Portfolio opinion which is available only for Premium members

Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

PAST TOP PICK
(A Top Pick Jun 13/24, Down 3.5%)Stockchase Research Editor: Michael O'Reilly

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.  

BUY

Is up today, likely from guidance from Toll Brothers. Are lots of tailwinds for homebuilders: falling interest rates and Kamala Harris' pledge in this scetor.

BUY

Cash flow yield of 11% and strong technicals.

BUY

They report Thursday. He expects the homebuilder to tell a terrific story. If the Fed cuts 50 basis points the day before, LEN could be a terrific place to be.

BUY

Economically sensitive, rate sensitive. If you have a 5-10 year horizon, US housing is still underbuilt. Still more valuation upside. Since 2008, all in the space have become higher quality and more of a manufacturing business.

PAST TOP PICK
(A Top Pick Feb 07/24, Down 12%)

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.

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TOP PICK

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.