Top 11 Home Builders & Housing-Related Stocks to Buy in 2019

Melisa R. H. Posted On August 29, 2019

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Home building is very cyclical and momentum oriented. It really depends on where we are in the economic cycle, and how housing is performing. Building starts have remained strong, and there’s still demand but not enough supply. Labour and land shortages will also push prices up. In a lowering interest climate, these stocks tend to do well, where as if the interest rate rises, they usually take a hit. If you can put up with a little bit of volatility, this sector would not be a bad idea. People have to live somewhere and the home builders and construction companies will do well over time.

🏗 Homebuilding

Canada Stock

Equitable Group (EQB-T)
A mortgage lender that pays a good dividend. It makes loans to on-conventional borrowers, so it has more risk than other companies. They raised dividends three times over the year and it is currently trading at 6.5x earnings. They experienced a good bump in stock prices after dealing with the Home Capital concerns from last year.

Equitable Group (EQB-T) — Stockchase

A great business with a strong management team. They take advantage of inefficiencies in Canadian industry that banks are not doing. Their bank offering is doing well with increase in account openings. They have seen big deferrals from last quarter but it has now stabilized. There is good organic growth and a possible expansion of…

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Genworth MI Canada Inc. (MIC-T)
They are a subsidiary of an American parent company. Banks tend to give some of their business to them. A non-bank financial and sells insurance on mortgages. They have a solid balance sheet and do not insure high risk mortgages.

Genworth MI Canada Inc. (MIC-T) — Stockchase

Share price on the path to recovery. Scores well on valuation, but held back by price momentum. Trades cheaply. Solid yield. Beat most recent quarter. Housing markets have been incredibly resilient. Could see himself as a buyer as they rotate into financials.

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Chartwell Seniors Housing (CSH.UN-T)
The largest company in the seniors housing sector. They pay a good dividend of around 4% and raises it by 2% per year. Occupancy rates have dipped a little, but it should improve over time, and in the meantime, you are paid to wait.

Chartwell Seniors Housing (CSH.UN-T) — Stockchase

Sees a bit of softness coming for seniors housing. Covid has elevated expenses. Operating margins pressured in an already tight sector. People are delaying opportunities to put loved ones into a home. Oversupply, which will take 2-3 years to fill up. Sell, and re-enter when we see what the new normal will be.

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U.S Stocks

Pulte Homes Inc (PHM-N)
The third largest home construction company in the U.S. It is a Fortune 500 company. They are specialized in large higher-end home building. Although their technicals are looking better, they have negative earnings still. The fundamentals are not supporting the chart.

Pulte Homes Inc (PHM-N) — Stockchase

Stockchase Research Editor: Michael O'Reilly This well diversified US home builder will continue to benefit from 30 year mortgage rates near historic lows -- especially as pandemic driven demand continues. It is trading at 8.5 times earnings, and projected to be only 7 times next years earnings. It pays a small dividend that is backed…

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Lennar Corp. (LEN-N)
The largest home construction company in the United States after a takeover in 2018. They operate mostly in the U.S. south but they are acquiring other hold builders. The stock is considered undervalued and trades at about 7x earnings.

Lennar Corp. (LEN-N) — Stockchase

Low mortgage rates and a want to move to less dense housing has been a tailwind for home builders. Financing is quite cheap and there is a real issue with supply. Demand outstrips supply. (Analysts’ price target is $87.78)

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D R Horton Inc. (DHI-N)
A leader in the home building space. It is considered to be the largest home builder in the world. There is a shortage of lots to build on and getting permit approvals, so they are struggling to meet demand.

D R Horton Inc. (DHI-N) — Stockchase

On Wednesday we'll see US home sales data, which he feels remain strong, but there isn't enough supply. Toll and DHI (DR Horton) are buys here to capitalize on this shortage.

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Toll Brothers Inc. (TOL-N)
A luxury home builder in major metropolitan areas in the United States. A good long term play where those who are patient will be rewarded. They have a lot of land holdings and will do well over time.

Toll Brothers Inc. (TOL-N) — Stockchase

On Wednesday we'll see US home sales data, which he feels remain strong, but there isn't enough supply. Toll and DHI (DR Horton) are buys here to capitalize on this shortage.

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Tri Point Homes, |Inc (TPH-N)
A relatively small home builder primarily in the south west United States. They also have activities in Texas. Labour and land costs hold them back and there is a disconnect between demand and supply.

Tri Point Homes, |Inc (TPH-N) — Stockchase

(A Top Pick Oct 18/16. Up 3%.) A relatively small homebuilder in a handful of states, primarily in the south west, and branded under a lot of different names. They also have some exposure to Texas. Thinks the whole group will move because household formation is still in a low trend. It has moved in…

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Hovnanian Enterprises (HOV-N)
A fully integrated construction company that is involved in marketing, design, construction and sales of homes. They missed expectations this year, and the stock price seems to be undervalued now.

Hovnanian Enterprises (HOV-N) — Stockchase

We are currently under-building and homebuilders are very attractive. They are now generally trading below book value. This wouldn't be his first choice because of the leverage they have.

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KB Home (KBH-N)
The first home builder to be publicly traded on the NYSE. Lower interest rates have benefitted this company. It could be a good opportunity if you believe interest rates will continue to be depressed.

KB Home (KBH-N) — Stockchase

It's a turnaround from 2008. Since then mortgage rates, high employment and strong supply/demand make him bullish in the housing space.

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Gafisa SA (GFA-N)
One of the largest Brazilian residential construction and real estate companies. Moody’s withdrew their rating of the company due to business reasons at the end of 2018. The company specializes in middle to high income residential homes as well as commercial properties in Sao Paulo and Rio de Janeiro.