Opinions
Gordon Reid
Pulte Homes Inc
PHM-N
TOP PICK
Jan 09, 2025
Stock price when the opinion was issued
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The US homebuilder saw a 24% increase in new orders over the year and 2nd quarter revenues were up 8% to over $4 billion. It trades at 7x earnings, 1.7x book and supports a 31% ROE. We like that cash reserves are growing, while debt is aggressively retired and shares bought back. We recommend a stop-loss at $65, looking to achieve $97 -- upside potential of 23%. Yield 0.8%
(Analysts’ price target is $97.27)We reiterate PHM as a TOP PICK. Recently reported earnings indicated a 43% increase in orders, which helped beat earnings expectations. It trades at 8x earnings, under 2x book and supports a 30% ROE. We like that cash reserves are growing, while debt is retired and shares bought back. We recommend trailing up the stop (from $65) to $69, looking to achieve $96 -- upside potential of 17%. Yield 0.7%
(Analysts’ price target is $95.47)Our PAST TOP PICK with PHM has triggered its stop at $109. To remain disciplined, we recommend covering the position at this time. This will result in a net investment gain of 36% when combined with the previous buy recommendations.
Has sharply risen since July with strong volumes. Has reached overbought territory now, at 52-week highs. The Chaikin Moneyflow which reflects institutional buying has been great. Has been making higher highs and higher lows. Lang says this could hit $200 next year.
Good opportunity here. Mid-range homebuilder. In 26 states. Good valuation around 10x PE. Some of the heat will come off the mortgage market, which will benefit homebuilders. Yield is 1%.