Cost of Housing is High; Invest in These Housing Stocks for Profit Instead
These aforementioned stocks have great potential for both mid and long-term investments.  Which are you considering?
avatar
Precious Njoku is a Financial Writer with extensive knowledge about the stock market.
2022-09-18 11:00

It's no news that the cost of housing is on the high side in the U.S., and affordability has fallen to low levels since Reagan was in office. The 30-year fixed mortgage rate shows that mortgage rates are currently over 6 percent.

Don't feel bad if you cannot afford the cost of housing now. Have you considered investing in housing stocks? Probably in a few months from now, the value of your stocks could buy you a good house.

There are many competitors on the U.S. stock exchange listings for housing stocks. That said, we are only interested in a few that stand out among the rest based on certain qualities such as Performance details, P/E ratios, and CAGR growths. Based on these qualities, some of the housing stocks considered are:Cost of Housing is High; Invest in These Housing Stocks for Profit Instead

1 - Lowe's Companies, Inc (NYSE: LOW)

Lowe's company is a unique world-class home improvement company with headquarters in North Carolina, the United States. There are 53 hedge fund holders in this company. Services include selling products for flooring, millwork, painting, and plumbing used in home improvement.

With about 2,000 stores in the U.S. and Canada, Lowe's Company (NYSE: LOW)is the largest home development company in the world. The firm's forward P/E ratio is 14.2x, lesser than its previous P/E ratio of 20.8, indicating a discount value.

Its dividends have grown by 19% CAGR in the last 5 years, and a healthy 26% payout ratio rewards investors. The company currently pays a $1.05 dividend per share for a 2.12% yield.

The share price target was raised by Truist to $263 from $237 in August 2022 due to observe growth in sales and profit. 53 of the 895 hedge funds part of Insider Monkey's 895 hedge fund survey for Q 2022 had held a stake in the company.

The company's largest investor is Bill Ackman's Pershing Square, which owns 10 million shares worth about $1.7 billion. Despite all odds, the steady growth pattern of this company stock is a solid reason to consider buying it.

2 - Builders FirstSource Inc (NYSE: BLDR)
Builders FirstSource is a home building company that provides construction materials and services to home builders. The firm's headquarters is located in Texas, United States of America.

Builders (NYSE: BLDR) reported a remarkable Return On Capital Invested (ROIC) of 43% - more significant than its WACC ( Weighted Average Cost of Capital),proving that potential investors should consider the firm. A consensus share price target of $97.21 for an upside compared to the current share price of $61 has been reached.

Stifel raised the company share price target to $92 from $87 in August. Christopher Shackleton and Adam Gray's Coliseum Capital are the most prominent investors possessing a $347 million stake from 6.4 million shares. Following the analyst's consensus, it is advisable to buy Builders FirstSource stocks.

3 - Lennar Corporation (NYSE: LEN)
Lennar firm is one of the largest top home builders in the United States of America. They offer various products and services, which include: sales of detached and single-family attached homes, sales and development of residential land, and multifamily rental properties.

It reported a 59% net income growth during Q2 when the market was experiencing a downturn. Thus, making it a suitable stock to add to your portfolio due to its resilient nature.

With deliveries and backlogs increasing by 14% and 16%, respectively, the company is resilient in a harsh macro environment. The company's report shows that its net debt to capital dropped to 13% from 32% in 2019, indicating growth. It also pays 38 cents in dividends for a 1.9% yield.

Lennar Corporation's share price target was $82 by BofA in August 2022. The company's largest investor is Edgar Wachenheim's Greenhaven Associates, possessing 9.3 million shares worth $657 million. This stock possesses great potential and should be placed on the watchlist for purchase.


Disclaimer: I have no positions in any of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. All information should be independently verified and should not be relied upon for purposes of transacting securities or other investments. See terms for more info.

Rate this article

positive
negative
Published On
2022-09-18 11:00

avatar
About the Author
Precious Njoku is a Financial Writer with extensive knowledge about the stock market.

Analyst Ratings
Target Price$246.2
# of Analysts26
Last updated2022-09-26

buy-coffee
You've read 1 article in the last year
..thank you for supporting us and for visiting our site. Unlike many other sites, The Dog of Wall Street is available for everyone to read. Our focus is to provide great content for free. Do you like what we are doing? Buy us a cup coffee. It is the fuel that keeps us going..

3 Final Earnings I'm Watching For the Coming Week
There are still some major companies reporting this week.
By Mike Sakuraba | 4 weeks ago

Don’t Be Caught In The Bed and Beyond Meme Stock Madness!
Meme stock valuation depends on the hype, not the stock's fundamentals.
By Precious Njoku | 1 month ago

Stocks Buffett's Berkshire Hathaway (BRKB) Sold Off This Year
This year, Warren Buffett has sold a considerable number of stocks.
By Precious Njoku | 1 month ago

BBBY Short Squeeze: Have We Learned Our Lesson Yet?
Ryan Cohen Does Not Owe Us Anything.
By Mike Sakuraba | 1 month ago

Why Electric Vehicle Stocks Have an Uphill Climb
Rivian Cancels Pre-Orders, Short Seller Bets Against Tesla.
By Mike Sakuraba | 1 month ago

3 More Earnings to Focus On Next Week
Here are actually a few major companies that will be reporting next week.
By Mike Sakuraba | 1 month ago

Why Softbank's Sale of Alibaba Stock was a Good Move
Softbank Group Corp. (OTCMKTS: SFTBY),a Japanese multinational company, has gained much reputation over the years for investing in startups and making money.
By Precious Njoku | 1 month ago