Lennar Corp. (LEN)

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.

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.

Cash flow yield of 11% and strong technicals.

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.

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.

Shares have done phenomenally. He likes the space, has more indirect exposure through building supply stores rather than homebuilders. Shortage of homes in US. Trading at 10x next year's earnings, not expensive.

Expects continued balance sheet strengthening more. Free cash is strong as is new home orders, 25-30% up. Palantir said that Lennar is using their AI.

Remarkable story and she expects a good quarter and upside surprise. Trades at 11x earnings while the group is 9-11x. She prefers Home Depot, the laggard, but likes housing overall due to the housing shortage in the U.S., especially when rates come down.

Last January, they raised their dividend by 33% and raise their buyback plan. This despite rising interest rates last year. He expects a good report next week.

In a low interest rate environment, mortgages are more accessible and homebuilders are busier. Undersupply of homes for a couple of decades, in both Canada and US. Homebuilders have all become more efficient in buying land and building on it. Trades at 9.5x earnings, with earnings growing in the low teens. Yield is 1.3%.