Homebuilder stocks that are still worthwhile
They've been surging this year as the housing market finally revives, so the trick is finding attractively valued shares.
Not surprisingly, shares of homebuilders have posted some huge gains. D.R. Horton (DHI), which builds more homes than anyone else, has jumped more than 30% so far this year, while Toll Brothers (TOL), the largest builder of luxury homes, has gained more than 11%. KB Home (KBH) has rocketed more than 46% and even expects to be profitable this year, reversing a 2012 loss of $1.56 billon. Lennar (LEN), which last quarter tripled earnings, has risen more than 8%.
However, you can still find some compelling values among these stocks even though investors are already factoring the improving housing market into their prices.
Take D.R. Horton. CEO Donald J. Tomnitz recently said the first half of its 2013 fiscal year was "phenomenal" and that the company expects the second half to be "even better." The stock trades at price-to-earnings multiple of 8.52, the lowest of its peers. Analysts have a 52-week price target on the stock of $27, about 4% higher than where it currently trades.
Toll Brothers and Lennar are also fairly cheap, trading at multiples of about 13. They're also both trading under their 52-week price targets. Toll Brothers recently noted that the average price of homes it delivered rose 3.6% to $577,000. The Horsham, Pa., company would give investors exposure to the luxury consumer, although Toll disappointed earlier this year.
Lennar, which has said its spring selling season was off to a strong start, pays a dividend and Toll does not, which makes it a good second choice after D.R. Horton in this sector.
Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.
Housing? New housing builds and smoke and mirror investment schemes is what got us in this mess. These clowns are/were a huge part of the problem, basically building housing for investors driven by cheap and easy money, greased by congress and the Fed and administered by Goldman, Leahman et al. The US must fundamentally and structurally change, which we have not. Not one thing has changed since 2008 except we spend more and borrow more digging ourselves deeper into a Greece-like situation. The lefties shouted during both of the last two elections, "we can't go back to the failed Bush policies" - hey folks, the #1 policy of Bush that caused the majority of the problems was the Fed policy; which the new pres has not only embraced but has 10-tupled down on. So when you hear, "we can't go back to the Bush era", tell them to shut up, we already there times 10.
Big home builders aren't going anywhere. Renovators and new companies specializing in affordable alternative and profit-generating home add-ons will have the legs. The future of housing is deterent on our ability to break free from oil reliance and create infrastructure that doesn't command most of our income for transportation and shelter costs.
Anybody notice that Fat Cat- an obvious retirement broker shyster- never seems to be with the times or the prevailing trends? It's pretty SCARY to think that he/she/it handles other people's monies. Makes you wonder if any of his clients are coherent or actually know what he posts on these blogs.
Housing is booming in some parts of the country.Much of Florida is doing good.Here in
the Southwest, houses are at all time highs.
Is it just me that thinks that MSN puts out these articles at the WRONG TIME ?
Going into the summer months is the absolute worst time for housing.
HELLO-HURRICANE SEASON STARTS IN JUST 3 DAY'S !!
And if you live in the mid west, you don't buy a home during tornado season-or the west during the fire season. people usually wait until that seasonal weather is past them.
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