LGIH - LGI Homes, Inc.

NasdaqGS - NasdaqGS Real Time Price. Currency in USD
+2.81 (+5.27%)
At close: 4:00PM EDT

55.88 -0.25 (-0.44%)
After hours: 4:11PM EDT

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Previous Close53.32
Bid54.70 x 1100
Ask62.49 x 800
Day's Range53.46 - 56.69
52 Week Range37.16 - 81.88
Avg. Volume352,853
Market Cap1.275B
Beta (3Y Monthly)0.98
PE Ratio (TTM)9.00
EPS (TTM)6.24
Earnings DateN/A
Forward Dividend & YieldN/A (N/A)
Ex-Dividend DateN/A
1y Target Est63.75
Trade prices are not sourced from all markets
  • GlobeNewswire2 days ago

    LGI Homes Expands Presence in Las Vegas

    LAS VEGAS, March 19, 2019 -- LGI Homes, Inc. (Nasdaq:LGIH) today announced the opening of Steptoe, its newest community in Las Vegas. “We are ecstatic to open Steptoe, our.

  • These stats say now may be the time to buy home-builder stocks
    MarketWatch2 days ago

    These stats say now may be the time to buy home-builder stocks

    DEEP DIVE What a difference a few months can make. During 2018, and especially during the fourth quarter, investors were concerned about rising interest rates and were beginning to fear that a recession was looming.

  • Can You Imagine How Chuffed LGI Homes’s (NASDAQ:LGIH) Shareholders Feel About Its 217% Share Price Gain?
    Simply Wall St.5 days ago

    Can You Imagine How Chuffed LGI Homes’s (NASDAQ:LGIH) Shareholders Feel About Its 217% Share Price Gain?

    The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But on a lighter note, a good company can see its shareRead More...

  • 7 Single-Digit P/E Stocks With Massive Upside
    InvestorPlace6 days ago

    7 Single-Digit P/E Stocks With Massive Upside

    When investing, it is important not to be fooled by low valuations. That is to say, just because a stock has a cheap valuation relative to the market or its peers, that doesn't mean that the stock is a good buy. Instead, a cheap valuation is often reflective of weak fundamentals. If the fundamentals stay weak forever, then the stock can likewise stay weak forever, too.As such, blindly buying all single-digit P/E stocks is not a good investment strategy. Most stocks with low valuations simply aren't worth the risk.Having said that, there are a handful of low P/E stocks that are worth the risk. These are the class of cheaply valued stocks that have an opportunity meaningful improve operations over the next several quarters or years, and as such, will rise sharply as favorable fundamentals converge on a discounted valuation.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Small-Cap Stocks That Make the Grade Which stocks belong in this category? Not many. But, here's a list of seven such single-digit P/E stocks that have visibility for big upside potential in the foreseeable future. LGI Homes (LGIH)Source: Shutterstock Forward P/E Multiple: 8.4First on this list is LGI Homes (NYSE:LGIH), a really beaten-up housing stock that should rise sharply in 2019 as fundamentals stabilize and improve within the U.S. housing market.LGIH stock dropped sharply in 2018 on signs that the housing market was slowing. The Fed was tightening, so mortgage rates were rising. The economy was slowing, so housing starts were dropping. Inventory was big relative to demand. Home prices were starting to flatten out.All those headwinds are reversing course in 2019. The Fed isn't tightening anymore. Mortgage rates are falling, while wage growth is at a decade-high, unemployment levels are at record lows, and home ownership rates are way off their highs. The economy is stabilizing, and housing starts are jumping back. Inventory is falling. Demand is coming back. Home prices are showing signs of rising again.If these housing market improvements persist throughout 2019, then LGIH stock should rally in a big way as those fundamental improvements converge on an anemic 8.4 forward multiple. AT&T (T)Source: Shutterstock Forward P/E Multiple: 8.5Next up: AT&T (NYSE:T). The telecom giant has been hammered on debt concerns in today's slowing economy and rising rate environment.Long story short, AT&T acquired Time Warner in 2018, and in doing so, amassed the world's biggest debt load ever seen. Shortly thereafter, rates started moving sharply higher, and economic growth started materially slowing. That combination put significant pressure on AT&T's huge new debt load, and weighed on AT&T stock.Those headwinds are turning around. Rates aren't moving higher anymore. They are actually moving lower. Economic growth is slowing. But, recession fears were overblown, and now the consensus seems to be stable and slower going forward. As such, all that pressure on AT&T's balance sheet should ease in 2019. As it does, T stock should rise. * 7 Best Quantum Computing Stocks Trading Today It also helps that AT&T will get big help from the roll-out of 5G coverage in 2019, while streaming operations should get a nice boost from Time Warner's content assets. That double tailwind, plus favorable macroeconomic trends and a 8.5 forward multiple, should lead to gains for T stock in 2019. Micron (MU)Source: Shutterstock Forward P/E Multiple: 5.3One of the more hated stocks on Wall Street right now is chipmaker Micron (NASDAQ:MU). For the past several months, the stock has traded at a single-digit forward multiple. Yet, during that stretch, MU stock has broadly gone lower, not higher.Why? The valuation is already pricing in peak earnings. In a nutshell, Micron goes as the memory market goes, and the memory market goes based on on supply-demand fundamentals. Those supply-demand fundamentals are notoriously cyclical. Eras of high supply and low demand, are followed by eras of low supply and high demand, and vice versa.Right now, we are going from an era of low supply and high demand (good for Micron), to an era of higher supply and lower demand (bad for Micron). During those transitions, profits drop. But, the magnitude of the drop is an unknown. Investors don't like unknowns. So, they sell MU stock, and prepare for the worst.The worst may not happen this time around. Demand drivers in the memory market are very robust, thanks to things like the cloud, IoT, data, and AI, and should provide cushion for earnings erosion during this down-cycle. If that does happen, and earnings don't fall by that much, then MU stock could soar from today's 5.3 forward earnings base. Ford (F)Source: Shutterstock Forward P/E Multiple: 7.2The big bear thesis in Ford (NYSE:F) stock - which has dragged the stock from $16 to $8 over the past 5 years - has merit. Namely, car ownership rates are dropping in the sharing economy, and project to fall further as the sharing economy grows in popularity. Also, Ford is losing market share to new EV players, like Tesla (NASDAQ:TSLA), and this dynamic should continue for the foreseeable future, too.But, this bear thesis is already fully priced into Ford stock. In the big picture, Ford will be just fine. Sure, the auto market is shrinking and Ford is taking home less share. But, the auto market isn't disappearing, nor will it ever disappear, and Ford will forever remain an important player in that market. As such, sales and profits should remain stable going forward, with potential gains from an EV pivot. * 5 Stocks That Hedge Funds Love At just 7.2-times forward earnings, Ford stock isn't priced for stability, let alone any upside. But, in the long run, investors will get stability, and potentially even some upside. As such, Ford stock could rally big from here in a multi-year window. Signet Jewelers (SIG)Source: Shutterstock Forward P/E Multiple: 8.4Haven't you heard? Millennials are pushing back big life events, like marriage, and consequently, just aren't buying wedding rings. That's largely why Signet Jewelers (NYSE:SIG) has struggled dramatically over the past several years.But, there's more at play here. Young consumers aren't just pushing back big life events. They are valuing experiences over products, and choosing to spend their paycheck on travel, not jewelry. Why? Because an exotic beach is much more "Instagrammable" than a new necklace or ring.This trend isn't reversing course soon. But, consumer demand for jewelry has been alive and well for 2,000-plus years. It isn't going away anytime soon because of Instagram. Regardless of how the IG trend plays out, the jewelry industry will be just fine, supported by healthy and secular demand drivers that are far more enduring than pretty much any other trend out there.Because of this, it's only a matter of time before Signet's numbers stabilize. Once they do, SIG stock -- which trades at just 8.4 forward earnings versus a five-year average forward multiple of 14 -- will roar higher. Macy's (M)Source: Mike Mozart via FlickrForward P/E Multiple: 7.7By now, everyone knows the retail apocalypse isn't happening. E-commerce and brick-and-mortar commerce need to exist together, because there is demand and need for both. As the market has realized this over the past year-plus, traditional retail stocks have bounced off their retail apocalypse lows.Macy's (NYSE:M), though, has had a tough time holding onto those gains. The numbers at Macy's have been disappointingly weak, especially relative to department store peers on a comparable sales and margin basis. As such, investors have been unwilling to buy into the Macy's rebound story, and Macy's stock has dropped over the past few quarters.This is all just near term noise. In the big picture, Macy's has created a sustainable niche for itself in the apparel retail world as the happy medium between quality and price. It isn't Walmart (NYSE:WMT), where quality is questionable and prices are great. Nor is it Nordstrom (NYSE:JWN), where quality is great and prices sometimes required a double check. Instead, it's right in the middle of the two, with passable quality at reasonable prices. * 3 Best Restaurant Stocks Morgan Stanley Says to Take a Bite Of That niche has long term staying power since a majority of consumers find themselves in that middle-income band (52% of Americans live in the middle class). To be sure, that doesn't mean the numbers will ever be great again. There's a little company called Amazon (NASDAQ:AMZN) that is also fighting for that middle class. But, the numbers will stabilize, and stability is enough to create a big rally in Macy's stock from today's 7.7-times forward earnings base. International Business Machines (IBM)Source: Shutterstock Forward P/E Multiple: 9.9International Business Machines (NYSE:IBM) has had a tough run over the past several years as new and upcoming tech companies have passed up Old Big Blue in critical growth markets, like cloud and AI. As this has happened, IBM's growth rates have fallen flat. Margins, too. And IBM stock has crashed.But, not all hope is lost. IBM's cloud business is turning the corner, and its business will continue to turn the corner in 2019 as the company integrates high-growth Red Hat hybrid cloud operations into its ecosystem. As this happens, IBM's growth rates will improve. Margins will improve, too. Analysts will upgrade the stock. Investors will get excited.All of those positive catalysts will attract more buyers to the stock. How many more buyers? Quite a few. At under 10-forward earnings, IBM stock is by far the cheapest way to play the cloud revolution. Thus, so long as IBM gets its act together on the cloud front, this stock has plenty of runway ahead through multiple expansion.As of this writing, Luke Lango was long LGIH, T, TSLA, SIG, M and AMZN. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Dividend Stocks to Buy Today * 7 ETFs to Buy to Ride the Longevity Economy * 7 Winning High-Yield Dividend Stocks With Payouts Over 5% Compare Brokers The post 7 Single-Digit P/E Stocks With Massive Upside appeared first on InvestorPlace.

  • 7 Housing Stocks Bouncing Back In 2019
    InvestorPlace8 days ago

    7 Housing Stocks Bouncing Back In 2019

    In early 2019, I wrote in an InvestorPlace gallery about why housing stocks would be a good place to park your money in the new year. The thesis was pretty simple. Improving economic and housing sector fundamentals, coupled with oversold conditions, created a golden buying opportunity in overly beaten up housing stocks in early 2019. The conclusion? After a rough 2018, housing stocks were ready for a breakout in 2019.That thesis has played out as expected. After falling more than 25% in 2018, the SPDR S&P Homebuilders ETF(NYSEARCA:XHB) is up nearly 20% so far in 2019, and it's only early March. The catalyst behind this move higher in housing stocks has been economic, housing market and financial market stabilization, which together have reinforced that the fundamentals underlying housing stocks remain favorable.This rally in housing stocks will continue. The fundamentals are only getting better. Housing starts are turning around. Home values are still rising. Mortgage rates are still falling. Meanwhile, home ownership rates remain well below where they have been historically, wages are rising at their fastest pace in a decade, the unemployment rate is at a record low and consumer confidence is back.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 15 Stocks Sitting on Huge Piles of Cash All together, the fundamentals underneath housing stocks remain healthy. Meanwhile, valuations are still largely depressed. As such, the outlook for housing stocks to head higher for the foreseeable future is quite favorable.Source: Shutterstock Housing Stocks to Buy: LGI Homes (LGIH)YTD Gain: 30%The housing stock that has staged the biggest gain this year is LGI Homes (NYSE:LGIH). This U.S. homebuilder has a history of sustained growth and broad exposure to the U.S. housing sector, with operations in 26 markets and 16 states. As such, theory says that as goes the U.S. housing market, so goes LGIH stock.That's exactly what has happened in early 2019. The housing market has materially improved. LGI's numbers have materially improved, too, with the company reporting growth across revenues, home closings, average home sales prices, and gross margins last quarter. Those strong numbers converged on a discounted valuation, and LGIH stock has consequently been on a solid uptrend.This uptrend should continue. U.S. housing market fundamentals are improving. LGIH stock remains cheap (7x forward earnings). That combination should keep LGIH stock on a winning track for the foreseeable future.Source: Squidish via Flickr (modified) KB Home (KBH)YTD Gain: 25%Another homebuilder which has soared in early 2019 as favorable fundamentals have converged on a discounted valuation is KB Home (NYSE:KBH).Heading into the year, KBH stock was trading at 7x forward earnings. Then, the company reported strong fourth quarter numbers that included slight delivery volume growth and roughly stable profit margins. Those are pretty good numbers for a homebuilder trading at 7x forward earnings, so KBH stock has naturally staged a big rally ever since. * The 10 Best Stocks to Buy for the Bull Market's Anniversary This rally will continue. KBH stock is still really cheap, at now 9x forward earnings. The numbers will only get better, as you will probably see selling price growth come back into the picture this year and drive positive revenue growth alongside stable margins. If so, the stock should keep heading higher, given that it still isn't priced for much growth.Source: Shutterstock Lennar (LEN)YTD Gain: 23%Much like KB Home, homebuilder Lennar (NYSE:LEN) is up more than 20% year-to-date thanks to better-than-expected quarterly numbers which, combined with improving macroeconomic data, implied that things aren't as bad as feared in the U.S. housing sector.Specifically, Lennar reported fourth-quarter numbers in early 2019 that weren't great. Growth slowed and margins were under pressure. But growth was still positive, margins didn't fall that much and average selling prices were up. In other words, things were bad, but not that bad. Ever since, macroeconomic data has improved, likewise meaning that Lennar's operations have likely improved, too.If so, LEN stock should stay on an uptrend. The stock is still incredibly cheap at 8x forward earnings, and the numbers have an opportunity to meaningfully improve. That is a winning recipe for a housing stock.Source: -v via Flickr (modified) D.R. Horton (DHI)YTD Gain: 20%The number one homebuilder in America by closings volume -- D.R. Horton (NYSE:DHI) -- naturally has a ton of exposure to the housing market. As such, as housing market fundamentals have improved, DHI stock has bounced back.The fundamentals here are good. DHI is the biggest homebuilder in America and has been for almost two decades. The company has broad geographic and demographic diversity, and controls dominant market share in rapidly expanding metro areas like Phoenix and Dallas Fort Worth. Fiscal 2018 was a great year for the company. There were some concerns that fiscal 2019 would be different. It hasn't been. First-quarter numbers were strong, characterized by healthy growth in closings and orders. * 7 Top Stocks to Buy From Goldman Sachs' Secret Portfolio In other words, DHI's numbers coupled with improving housing market data imply that 2019 will look a lot more like 2018 that anyone had previously expected. That's a good thing for DHI stock, which still trades at a rather cheap 10x forward earnings.Source: Ryan Homes NVR (NVR)YTD Gain: 14%The rally in homebuilder NVR (NYSE:NVR) has been subdued relative to some of its peers thanks to less-than-stellar fourth-quarter numbers.Specifically, in NVR's fourth quarter, everything was down. New order volume dropped 11%. Average sales prices dropped 1%. Backlog dropped 2% on a unit basis and 4% on a dollar basis. By most gauges, the quarter was not very good.But, it was good enough to lift a stock that was trading at just 14x forward earnings. Plus, the fundamentals here are good (big homebuilder with wide geographic and income exposure), and the macroeconomic backdrop has only improved since the fourth quarter of 2019. As such, NVR stock looks good for big rally in the foreseeable future.Source: Shutterstock Toll Brothers (TOL)YTD Gain: 9%Homebuilder Toll Brother (NYSE:TOL) has gained only 9% in a resurgent housing market in 2019, but that could change soon, as the stock looks ready to take a big leg higher.Toll Brothers recently reported first-quarter 2019 numbers, and they were really good. Not only did they blow past consensus estimates, but they broadly confirmed that this company is hugely benefiting from underlying improvements in the U.S. housing market. Thus, investors are now correlating improvements in the U.S. housing market to improvements in TOL's numbers. * 7 Dow Jones Stocks to Buy That's a really good thing. The U.S. housing market should improve throughout 2019. Investors will interpret that as meaning TOL's numbers are getting better, too. With TOL stock trading at just 8x forward earnings, that interpretation should lead to a lot of buying, and all that buying should push TOL stock way higher. Housing Stocks Bouncing Back: PulteGroup (PHM)YTD Gain: 7%Despite rising only 7% in 2019 amid a resurgent housing market, PulteGroup (NYSE:PHM) is actually one of the more attractive homebuilder stocks, supported by healthy long-term fundamentals.PulteGroup is big (the nation's third largest homebuilder), with healthy geographic diversity (25 states and nearly 50 major markets) and broad demographic diversity (30% entry-level buyers, 30% move-up buyers, 15% luxury buyers and 25% active adult buyers). Because of this wide exposure, PulteGroup truly moves with the U.S. economy.In the fourth quarter of 2018, when the U.S. economy was decelerating, PulteGroup still reported increases in closings volume and average sales prices. The economy has only improved since then. So have PulteGroup's numbers. But, PHM stock is up only 7% in 2019, and still trades at just 8x forward earnings. As such, the bull thesis here through EPS growth and multiple expansion looks compelling.As of this writing, Luke Lango was long XHB, LGIH, KBH and TOL. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 5 of the Best Stocks to Buy Under $10 * 7 Retail Stocks Winning in 2019 and Beyond * The 10 Best Stocks to Buy for the Bull Market's Anniversary Compare Brokers The post 7 Housing Stocks Bouncing Back In 2019 appeared first on InvestorPlace.

  • GlobeNewswire10 days ago

    LGI Homes Introduces New Floor Plans and New Community in Charlotte, NC

    MONROE, N.C., March 11, 2019 -- LGI Homes, Inc. (Nasdaq:LGIH) is offering a new lineup of upgraded homes at its newest community, Stratford, in Monroe, NC. In this new.

  • GlobeNewswire16 days ago

    LGI Homes, Inc. Reports February 2019 Home Closings

    THE WOODLANDS, Texas, March 05, 2019 -- LGI Homes, Inc. (Nasdaq:LGIH) today announced 393 homes closed in February 2019, up from 368 home closings in February 2018,.

  • Thomson Reuters StreetEvents20 days ago

    Edited Transcript of LGIH earnings conference call or presentation 26-Feb-19 5:30pm GMT

    Q4 2018 LGI Homes Inc Earnings Call

  • The Top 5 New Buys of Chuck Royce's Firm
    GuruFocus.com21 days ago

    The Top 5 New Buys of Chuck Royce's Firm

    Royce & Associates, the firm led by renowned value investor Chuck Royce (Trades, Portfolio), disclosed 80 new positions in its fourth-quarter 2018 portfolio, which was released earlier this month. Warning! GuruFocus has detected 1 Warning Sign with HUN. It looks for value opportunities among companies that are trading at a discount to enterprise value.

  • Pending home sales roar back, suggesting a spring uptick for housing
    MarketWatch22 days ago

    Pending home sales roar back, suggesting a spring uptick for housing

    The numbers: A measure of pending home-sales jumped 4.6% in January, the National Association of Realtors said Wednesday. What happened: NAR’s pending home-sales index, which tracks home contract signings, registered at a reading of 103.2 in January after it touched a nearly five-year low in December. Big picture: With a broad array of headwinds and tailwinds buffeting the housing market, sales patterns have been choppy.

  • Does LGI Homes, Inc.’s (NASDAQ:LGIH) CEO Pay Compare Well With Peers?
    Simply Wall St.22 days ago

    Does LGI Homes, Inc.’s (NASDAQ:LGIH) CEO Pay Compare Well With Peers?

    In 2009 Eric Lipar was appointed CEO of LGI Homes, Inc. (NASDAQ:LGIH). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth thatRead More...

  • Associated Press23 days ago

    J.M. Smucker and AutoZone rise, Discovery and LGI Homes fall

    The pharmaceutical company beat fourth-quarter profit and revenue forecasts and issued a strong outlook for the year. The media company fell short of Wall Street's fourth-quarter profit and revenue forecasts. The rental products center beat profit and revenue forecasts for the quarter, but gave a weak forecast for full-year revenue.

  • LGI Homes Inc (LGIH) Q4 2018 Earnings Conference Call Transcript
    Motley Fool23 days ago

    LGI Homes Inc (LGIH) Q4 2018 Earnings Conference Call Transcript

    LGIH earnings call for the period ending December 31, 2018.

  • Housing starts sink 11% to two-year low in December, but rising permits point to rebound
    MarketWatch23 days ago

    Housing starts sink 11% to two-year low in December, but rising permits point to rebound

    Construction on new houses sank 11% in December to a more than two-year low, but builders applied for more permits in a sign that a rebound is near. Housing starts tumbled to an annual rate of 1.08 million in the final month of 2018.

  • GlobeNewswire23 days ago

    LGI Homes, Inc. Reports Fourth Quarter and Full Year 2018 Results and Releases 2019 Guidance

    THE WOODLANDS, Texas, Feb. 26, 2019 -- LGI Homes, Inc. (Nasdaq:LGIH) today announced results for the fourth quarter 2018 and the twelve months ended December 31, 2018. Fourth.

  • GlobeNewswire24 days ago

    LGI Homes Announces the Grand Opening of its First Community in the Mid-Atlantic

    LGI Homes, Inc. (LGIH) today announced its entry into the greater Washington D.C. metropolitan area with the upcoming grand opening of McGinnis Point in Martinsburg, West Virginia. At McGinnis Point, LGI Homes will unveil a brand-new collection of one- and two-story single-family homes.

  • Benzinga28 days ago

    Wedbush Talks Homebuilders Ahead Of Next Week's Busy Schedule

    The end of February will be a busy period for homebuilder investors given a number of forthcoming economic releases and earnings reports. The following is what investors need to know, according to Wedbush's ...

  • Can LGI Homes (LGIH) Keep the Earnings Surprise Streak Alive?
    Zackslast month

    Can LGI Homes (LGIH) Keep the Earnings Surprise Streak Alive?

    LGI Homes (LGIH) has an impressive earnings surprise history and currently possesses the right combination of the two key ingredients for a likely beat in its next quarterly report.

  • GlobeNewswirelast month

    LGI Homes Opens New Community in Tucson With New Floor Plans

    TUCSON, Ariz., Feb. 07, 2019 -- LGI Homes, Inc. (Nasdaq:LGIH) today announced the grand opening of a new community in Tucson. “We are thrilled to open Cantera, our newest.

  • GlobeNewswirelast month

    LGI Homes, Inc. Reports January 2019 Home Closings

    THE WOODLANDS, Texas, Feb. 05, 2019 -- LGI Homes, Inc. (Nasdaq:LGIH) today announced 269 homes closed in January 2019, compared to 277 home closings in January 2018. As of the.

  • LGI Homes, Inc. (NASDAQ:LGIH) Is Employing Capital Very Effectively
    Simply Wall St.last month

    LGI Homes, Inc. (NASDAQ:LGIH) Is Employing Capital Very Effectively

    Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card! Today we'll look at LGI Homes, Inc. Read More...

  • GlobeNewswire2 months ago

    LGI Homes Introduces New Lineup of Floor Plans in Phoenix

    PHOENIX, Ariz., Jan. 24, 2019 -- LGI Homes, Inc. (Nasdaq:LGIH) unveils an array of new floor plans at the Tuscano community in Phoenix, located 12 miles west of downtown. “We.

  • GlobeNewswire2 months ago

    LGI Homes Adds Townhomes to Its Crystal Lakes Community Near Katy

    LGI Homes, Inc. (LGIH) today announced the construction of a new section of townhomes within its Crystal Lakes community, located west of Houston and near the I-10 Energy Corridor. “Townhomes are a great option for homebuyers looking for an energy-efficient, new home without the responsibility of a large yard,” said Alvin Edwards, Vice President of Sales in Houston for LGI Homes. LGI Homes is outfitting the new townhomes with designer interior features such as granite countertops, 42-inch upper cabinets, and a full set of stainless-steel kitchen appliances including a refrigerator and a built-in microwave.

  • 7 Beaten-Up Housing Stocks Due for a Bounce Back
    InvestorPlace2 months ago

    7 Beaten-Up Housing Stocks Due for a Bounce Back

    Housing stocks were at the core of the late 2018 turbulence in financial markets, mostly because the things that were killing broader markets (the threat of rate hikes and a slowing economy) are especially large headwinds for housing stocks. The SPDR S&P Homebuilders ETF (NYSEARCA:XHB) peaked in early 2018. Ever since, it has fallen 25%. But, where there's rubble, there's opportunity. Housing stocks actually look attractive here. They have been oversold on overstated concerns regarding the health of the housing market. In reality, the fundamentals underlying the housing sector aren't that bad. They are actually pretty good. Consider the following: * The U.S. consumer is healthy. Despite all the calls for a coming recession, the U.S. consumer is still relatively healthy. The unemployment rate is low. The economy is still adding hundreds of thousands of jobs every month. Labor participation rates are up. Wages are rising. Inflation is checked. Consumer confidence and sentiment are high. Retail sales were robust last holiday season. The personal savings rate is well above its 20 year average. A healthy consumer usually supports a healthy housing market. * Home prices are steadily rising. The S&P/Case-Shiller U.S. National Home Price Index is still rising at a gradual mid single-digit year-over-year rate, the same rate it has been rising at for the past three years, thus indicating that supply-demand fundamentals underneath the housing market remain healthy, stable, and favorable for homebuilders. For comparison purpose, back before the housing crisis in 2007-08, home prices went from double digit growth in 2004-2005 to low single-digit growth in 2006 and negative growth in 2007. * New houses are being built at a steady and sustainable rate. The headlines continue to scream about weak housing starts data, but in the big picture, housing starts remain on a multi-year uptrend since 2008. Granted, the pace of the growth has slowed, but the trend presently looks more like moderation in housing starts than a steep drop off in housing starts. Prior to nearly every recession in history, housing starts volume plummeted heading into the economic slowdown. * We are in a seller's market, but buyers are sticking around. The monthly supply of homes in the U.S. real estate market currently measures 7.4. That is up sharply from where the months supply has hovered over the past several years, and does indicate that we are in a seller's market (usually numbers below 5 indicate a buyer's market, while numbers above 7 indicate a seller's market). But, 7.4 months of supply is only slightly above 7. Leading into prior housing market collapses, that number has usually risen as high as at least 8, but usually 10 or higher. * Home ownership rates are low, and have room to move higher. Last quarter, the home ownership rate in the U.S. was below 65%. In the early-to-mid 2000's, the home ownership rate was closing in on 70%. Thus, today's home ownership rate is well off its highs, implying that the pool of potential buyers is still relatively large. So long as that pool remains large, and the individuals within that pool remain economically healthy, the housing market should be relatively stable. * The Fed is going dovish. The Fed was exceptionally hawkish in late 2018. Their tune has changed dramatically in early 2019. Multiple current and former Fed members have come out and voiced dovish opinions regarding a "wait-and-see" approach to rate hikes, and many have suggested that this rate hike cycle may be over. * Mortgage rates are falling. Thanks to a dovish Fed, mortgage rates across the U.S. are finally falling after consistently and sharply rising for most of the back half of 2018. The 30-Year Fixed Rate Mortgage is around 4.45% today, roughly 45 basis points lower than where it was in mid-November. Falling mortgage rates increase home affordability, and increasing affordability usually sparks demand, especially against the backdrop of low unemployment, rising wages, and a high savings rate. * 7 Stocks to Buy as the Dollar Weakens Overall, the fundamentals underlying the housing market remain strong. Valuations on housing stocks are now anemic. That combination implies a solid opportunity to buy the dip in housing stocks. InvestorPlace - Stock Market News, Stock Advice & Trading Tips ### Housing Stocks Due for a Bounce: LGI Homes (LGIH) Source: Shutterstock One housing stock that looks really good here is LGI Homes (NASDAQ:LGIH). This is a stock which has fallen 30% off its recent highs and trades at a 20% discount to its "normal" valuation (10x trailing earnings, versus 12x average trailing P/E multiple). Yet, LGI just announced record December results that run contrary to the recent 30% decline and 20% valuation discount. As such, estimates and sentiment should move higher, providing a double tailwind for the stock through higher earnings and multiple expansion. Longer term, this is a healthy homebuilder with a history of sustained growth and broad exposure to the U.S. housing sector with operations in 26 markets and 16 states. So long as the housing market remains healthy, LGIH stock should head higher from here. ### Housing Stocks Due for a Bounce: Pulte Group (PHM) Source: Shutterstock Another housing stock that has been overly beaten up is Pulte Group (NYSE:PHM). Pulte Group is big (the nation's third largest homebuilder) with healthy geographic diversity (25 states and nearly 50 major markets) and demographic diversity (30% entry-level buyers, 30% move-up buyers, 15% luxury buyers, and 25% active adult buyers). Because of this broad exposure, Pulte Group truly moves with the U.S. economy. * 10 Growth Stocks With the Future Written All Over Them As stated before, the U.S. economy is actually doing just fine right now, and projects to be just fine for the foreseeable future. PHM stock is not priced for that. Not only has it fallen 20% off recent highs, but it's also trading at under 10x trailing earnings, versus an average trailing P/E multiple of over 12. Thus, so long as the economy continues to stabilize in 2019, PHM stock should rebound. ### Housing Stocks Due for a Bounce: NVR (NVR) Source: Jan Tik via Flickr A large housing stock which looks attractive on this dip is NVR (NYSE:NVR). NVR is a big homebuilder that operates in 14 sates and 31 metropolitan areas. The company's home building operations also span multiple income demographics. As such, given broad exposure to the housing market, stabilization in housing market fundamentals through an indefinite rate hike pause should propel NVR stock higher. If that does happen, NVR stock has plenty of room to run. NVR stock has fallen 30% off its recent highs. More than that, this stock normally trades around 20x trailing earnings. Today, it trades at just 15x trailing earnings. Thus, multiple expansion through improved sentiment could send shares materially higher. ### Housing Stocks Due for a Bounce: Lennar (LEN) Source: Shutterstock One housing stock which has been really beaten up is Lennar (NYSE:LEN). Much like the other homebuilders on this list, Lennar is big with healthy geographic and demographic diversity. But, LEN stock has been chopped down worse than most of its peers. As of this writing, the stock trades nearly 40% off recent highs. * Top 10 Global Stock Ideas for 2019 From RBC Capital This compression provides a big upside opportunity in 2019. If housing market fundamentals continue to stabilize, sentiment surrounding LEN stock will improve dramatically. That will lead to huge multiple expansion. Normally, LEN stock trades around 15x trailing earnings. Today, it trades at about half that level, around 8x trailing earnings. Thus, this stock could easily almost double from here if valuation simply reverts to the norm. ### Housing Stocks Due for a Bounce: D.R. Horton (DHI) Source: -v via Flickr (modified) The number one homebuilder in America by closings volume -- D.R. Horton (NYSE:DHI) -- also looks good on this dip. The fundamentals here are good. DHI is the biggest homebuilder in America and has been so for almost two decades. The company has broad geographic and demographic diversity, and controls dominant market share in rapidly expanding metro areas like Phoenix and Dallas Fort Worth. Fiscal 2018 was a good year, with healthy sales and closing growth and 20%-plus ROI. If these fundamentals persist in 2019 -- and they should -- then DHI stock will rebound in a big way. This stock is already more than 25% off its recent highs. It is also trading at just 10x trailing earnings, versus a five-year average trailing multiple of 15. Thus, multiple expansion and stabilized EPS forecasts could drive huge gains for DHI stock in 2019. ### Housing Stocks Due for a Bounce: KB Home (KBH) Source: Shutterstock The housing stock that was hit hardest in 2018 was KB Home (NYSE:KBH). Due to deterioration it its core operating results as a result of macroeconomic headwinds, KBH stock struggled throughout 2018. But, those macroeconomic headwinds are improving, and the company just reported fourth-quarter numbers that were largely better than expected and confirm a "less bad" macroeconomic backdrop. * 7 Oversold Small-Cap Stocks With Massive Profit Growth But KBH stock isn't priced for "less bad". It's priced for "more bad". KBH has plunged nearly 50% off its January 2018 highs, and trades at just 12x trailing earnings, versus a five-year average trailing P/E multiple of 15. Estimates have also come down sharply over the past several months. Thus, through a combination of multiple expansion and higher EPS revisions, KBH stock could soar in 2019. ### Housing Stocks Due for a Bounce: Toll Brothers (TOL) Source: Shutterstock The final beaten up housing stock on this list is Toll Brothers (NYSE:TOL). Due to rising home prices and mortgage rates, Toll Brothers shocked investors in early December by reporting its first decline in new orders in 4 years. That essentially confirmed a housing market slowdown, and kept bears in control of TOL stock. But, mortgage rates are now starting to fall, and that could provide a nice lift to beaten-up TOL stock. After all, this stock trades at just 7x trailing earnings. That's super cheap, even for a housing stock. It's also well below the stock's average trailing P/E of 17. Plus, 2019 EPS estimates have come down more than 10% in the past 90 days alone, implying that next year's numbers look beatable. Overall, successive EPS beats plus multiple expansion could drive huge gains for TOL stock in 2019. As of this writing, Luke Lango was long XHB, LGIH, KBH, and TOL. ### More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Growth Stocks With the Future Written All Over Them * 7 Reasons Why Buffett's Bet on Apple Stock Is a Good One * 10 Companies That Could Post Decelerating Profits Compare Brokers The post 7 Beaten-Up Housing Stocks Due for a Bounce Back appeared first on InvestorPlace.

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