Top 11 Home Builders & Housing-Related Stocks to Buy in 2019
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.
Extremely well managed company. Very successful in gaining market share in alternative lending. Launching initiative to become a challenger bank (will be 6th or 7th largest bank in Canada soon). Current share price presenting good buying opportunity. Share price to book value is currently a good price.
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.
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.
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.
Her long-term view on this hasn't changed after Covid. CSH is now operating 100% retirement homes and no longer in long-term care units. Post-Covid, the supply/demand side of seniors homes has improved slowly. CSH occupancy is around 78% and pre-Covid was 90%. No reason why it can't return to 90%. Inflation pressures CSH but given…
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.
(A Top Pick Jan 04/22, Down 12.2%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with PHM has triggered its stop at $50. To remain disciplined, we recommend covering the position at this time. When combined with the previous buy recommendation, this will result in a net investment loss of 3%.
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.
They release Tuesday. The housing sector has been rolling over due to rising rates, but hasn't seen many stock downgrades. TOL just got downgraded, and now he expects Lennar will too.
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.
When the market turns, buying US homebuilders is like catching a falling knife. The risk/reward looks in your favour. Housing shortage in the US. Many of them have great business models. Likes the business model of DHI. But you're fighting the macro of mortgage rates at 10 to 15-year highs. Not a great setup from…
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.
The housing sector has been rolling over due to rising rates, but hasn't seen many stock downgrades. TOL got downgraded today. It's already Fallen 45% from its highs. The bear case is still alive and well, though. The cost per home remains too high.
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.
(A Top Pick Dec 16/20, Up 60%) Inexpensive stock, around 6.5-7x earnings. Good backlog. Executing well. Up strongly already, and the bid should go higher.
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.
It has the lowest PE in the S&P 500 at slightly more than 2x. This usual means the estimates are way too high. They report Wednesday. If Lennar stock doesn't go down after their Tuesday report, then buy KB.
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.
(A Top Pick Nov 13/09. Down 23%.) South American homebuilder. Emerging market stocks have really dropped off from that time. Avoid this one for now.