5 Homebuilder Stocks You Can Ride Even Higher

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homebuilder stocks - 5 Homebuilder Stocks You Can Ride Even Higher

A house in McKinney, Texas

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While stocks rallied to an incremental new high on Tuesday, the action overall remained rather tepid. The summertime doldrums have set in.

homebuilders

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But in certain areas of the market, there is real excitement.

On such area is homebuilders, popularly traded via the SPDR S&P Homebuilders (ETF) (NYSEARCA:XHB), which has surged to levels not seen since early December thanks to a better-than-expected new home sales report. July sales increased to a seasonally adjusted annualized rate of 654k vs. the 580k expected.

This 12.4% rise pushed the index to levels not seen since October 2007. Inventory tightened, suggesting higher prices are on the way.

The buying in homebuilding stocks is fresh, and the industry’s names look ready to break up and out of multi-month consolidation ranges. That means more upside for investors and traders who aren’t already long.

Here are the five homebuilder stocks you should be looking to buy.

Homebuilder Stocks to Buy: Toll Brothers Inc (TOL)

Homebuilder Stocks to Buy: Toll Brothers Inc (TOL)Toll Brothers Inc (NYSE:TOL), a luxury homebuilder, is surging above its 200-day moving average for the first time since December after reporting its fourth straight quarter of improving revenues.

Earnings came to 61 cents — a 70% improvement year-over-year, and good enough to match the Wall Street consensus. Revenues were up 24% to $1.27 billion to edge out expectations. Net signed contracts rose 18% as management mentioned no softness in the high-end home market.

Toll Brothers is expected to report its fiscal Q4 results Nov. 22 before the bell. Analysts are looking for earnings of $1.09 per share on revenues of $1.7 billion.

Edge subscribers are enjoying a 10.7% gain in their TOL position.

Homebuilder Stocks to Buy: D.R. Horton, Inc. (DHI)

Homebuilder Stocks to Buy: D.R. Horton, Inc. (DHI)D.R. Horton, Inc. (NYSE:DHI), a builder of middle-income single-family and attached homes and originator and seller of mortgages, is seeing shares jump back over their 20-day moving average to break up and out of a month-long trading range near $32 per share.

DHI reported in-line earnings of 66 cents per share on July 21 on a 13% increase in net sales orders for the third quarter. Homebuilding revenues were up 9% year-over-year to $3.1 billion. And the company’s sales order backlog increased 15% to nearly 15,000 homes.

D.R. Horton will next report results on Nov. 10 before the bell. Analysts are looking for earnings of 76 cents per share on revenues of $3.6 billion.

Homebuilder Stocks to Buy: Lennar Corporation (LEN)

Homebuilder Stocks to Buy: Lennar Corporation (LEN)Lennar Corporation (NYSE:LEN), a builder of attached and detached single-family homes as well as multi-family rental properties, is seeing shares bounce off of trendline support near $46. This also coincides with the 200-day moving average. A run at the July highs should give way to a move back to levels not seen since late 2015.

LEN reported better-than-expected quarterly results back in June on a 14.8% rise in revenues and a 10% lift to new orders.

Lennar will next report results on Sept. 21 before the bell. Analysts are looking for earnings of 90 cents per share on revenues of $2.7 billion.

Homebuilder Stocks to Buy: PulteGroup, Inc. (PHM)

phm-stockPulteGroup, Inc. (NYSE:PHM) shares are challenging their late July highs near $22.50 — a resistance level going back to the spring of 2013. The company, which builds single-family attached and detached homes, was upgraded by buy by Deutsche Bank analysts in late July on renewed management focus on growth as worries from the 2007-08 housing bust fades.

PHM reported better-than-expected results on July 21, with the value of new orders rising 11%. Its backlog of $3.1 billion was the highest in nine years. Earnings of 28 cents per share beat expectations by 2 cents, though revenues of $1.28 billion were off a half-percent and short of estimates.

PulteGroup’s next earnings report is expected to come Oct. 20. Analysts are looking for earnings of 43 cents per share on revenues of $1.9 billion — a healthy 28% improvement.

Homebuilder Stocks to Buy: KB Home (KBH)

kbh-stockKB Home (NYSE:KBH), which builds single-family homes to both first-time and move-up buyers, is seeing shares return to their July highs in a test of resistance near $17 that goes back to 2014. KBH peaked in 2013 near $24.50.

KB Home reported better-than-expected results on the top and bottom lines on June 21. Notably, revenues jumped 30% to $811 million, which clobbered estimates for $753.4 million.

KBH will next report results on Sept. 22 before the bell. Analysts are looking for 12% revenue growth to $942 million, and earnings of 39 cents per share — 70% better than the year-ago period.

Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.


Article printed from InvestorPlace Media, https://investorplace.com/2016/08/5-homebuilder-stocks-tol-dhi-len-phm-kbh/.

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