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.
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.
Assuming that the contagion is not so devastating, and assuming that they can still raise capital at a reasonable cost, he thinks this company will pull through. A year from now, many of these companies will regain their losses.
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.
Private mortgage insurance. Finally broke out and did well. You have had most of the catch up in valuation. He would be nervous going forward with the Canadian real estate market continuing.
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.
(A Top Pick Dec 12/17, Down 2%) Pays over 4% yield. It slipped because of rising interest rates. They built somer supply in Ontario and Quebec, so occupancy in Ontario has temporarily slipped to 88% vs. 91% 18 months ago. The demand is definitely there to absorb these new rooms. She likes the play on…
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.
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.
Would not be a buyer right now, wait for a pull back, prefers tollbridgers as it is a higher end builder, but he even sold this one a month ago.
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.
The largest homebuilder in the US. One of the finest companies in America in any industry. Has a tremendous long-term track record. Has never had a down year in earnings for the last 28 years.
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.
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.
This is now one of the top 10 homebuilders in the US. Have a great management team. Very under covered. Just put out their 1st consolidated earnings guidance for 2015. Has a large inventory of high-quality building lots concentrated in California and Colorado.
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.
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.
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.
Thinks it is fairly early in the game for homebuilders. This company came home with very good results this morning and surprised the Street a little bit on revenues and on earnings. Average house prices are up 12%. They are mostly a Southwest US operation with a lot of business in California.
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.
Premier homebuilder in Brazil. Very high growth. Earnings were up roughly 350% in the last quarter. An emerging market play. Very high growth.