Lennar Corp. (LEN-N)

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%.

They report Thursday and he expects good numbers. But watch what the Fed does and say on Wednesday.

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.

Their recovery is spectacular. DR Horton is also a buy.

Normally at this point in the cycle, he's say these companies have had it, but LEN is so disciplined in spending on cost per house that this stock can return to all-time highs.

He's long in the homebuilders which are declining now. September earnings were okay, but shares were weak. These stocks peaked last spring, and he can't see a return to that as long as interest rates remain high.

Has good fundamentals, but not share price action, so there's a disconnect, which sometimes happens.