Breaking News
0

5 Stocks To Gain From The Upcoming Housing Recovery

By Zacks Investment ResearchJun 18, 2019 09:31PM ET
www.investing.com/analysis/5-stocks-to-gain-from-the-upcoming-housing-recovery-200432971
5 Stocks To Gain From The Upcoming Housing Recovery
By Zacks Investment Research   |  Jun 18, 2019 09:31PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

In more disappointing news for the housing sector, U.S. housing starts declined in May. Moreover, the National Association of Home Builders’ (NAHB) home builder confidence index declined for the first time this year in June. However, both reports should not be taken at face value, since there is enough evidence in them to suggest that the housing sector is poised for a rebound.

First, housing starts for March and April have been revised upward. Meanwhile, building permits have increased, indicating that the sector is gaining from the strong decline in mortgage rates.

Further, last month’s dip in homebuilder confidence is largely attributable to the fear of fresh tariffs on Mexican imports, a threat which no longer exists. Also, the sector is set to gain from rate cuts rates to occur later this year. This is why it is prudent to invest in stocks set to gain from the upcoming housing rebound.

Building Permits, Starts for March & April Rise

In May, housing starts declined by 0.9% to a seasonally adjusted rate of 1.269 million units. However, the figure is considerably higher than the estimated level of 1.235 million units. Last month’s decline was primarily attributable to a 6.4% plunge in single-family homebuilding. The metric, which makes up most of the housing market, declined to 820,000 units.

However, a large part of the decline is attributable to torrential rain and significant flooding in several parts of the United States. Meanwhile, building permits advanced 0.3% to 1.294 million units, marking the second straight monthly increase.

Further, permits for single-family homes increased for the first time in five months. The metric increased 3.7% to a pace of 815,000 units, posting a 7.7% increase in the South — the largest since December 2016. Gains for this forward-looking indicator imply that better times are coming for the sector.

Housing Market Sentiment Surges, Mortgage Rates Slide

In June, the NAHB home builder confidence index declined by 2 points to 64. The decline was largely attributable to the specter of fresh tariffs on Mexican imports. This is why the decline is likely a one-off event. The index has remained in the low- to mid-sixties, a considerably high level, till now this year and May’s was the highest reading since October 2018.

Meanwhile, independent research firm Pulsenomics’ Housing Confidence Index hit a five-year high of 71.65 in the first quarter. According to the firm’s founder, Terry Loebs, this is attributable to improving wage growth and lower mortgage rates. The U.S. 10-year note’s yield, which is tracked by fixed-rate mortgages, has plunged this year, a major positive for potential homeowners.

Our Choices

Despite the decline in housing starts for May, the housing sector seems set for a rebound over the next few months. This is borne out by the increase in building permits, particularly for single-family homes. Steady wage gains and low mortgage rates are helping to attract several prospective homeowners into the housing market.

This is why it makes sense to invest in stocks set to gain from the coming rebound in housing. However, picking winning stocks may prove to be difficult.

This is where our VGM Score comes in. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM Score.

We have narrowed down our search to the following stocks based on a good Zacks Rank and VGM Score of B.

PulteGroup Inc. (NYSE:PHM) engages in the homebuilding and financial services businesses primarily in the United States.

PulteGroup has a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for the current year has improved by 6.6% over the past 60 days.

NVR, Inc. (NYSE:NVR) is engaged in the construction and sale of single-family detached homes, townhomes and condominium buildings, all of which are primarily constructed on a pre-sold basis.

NVR has a Zacks Rank #1. The company has expected earnings growth of 1.8% for the current year. The Zacks Consensus Estimate for the current year has improved by 12.2% over the past 60 days.

BMC Stock Holdings, Inc. (NASDAQ:BMCH) is a distributor of lumber and building materials to building contractors in the United States.

BMC Stock Holdings’ Zacks Consensus Estimate for the current year has improved by 0.6% over the past 30 days. The stock has a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

U.S. Concrete, Inc. (NASDAQ:USCR) operates as a provider of ready-mixed concrete, and concrete-related products and services to the construction industry in the United States.

U.S. Concrete has a Zacks Rank #2 (Buy). The company has expected earnings growth of 35.4% for the current year. The Zacks Consensus Estimate for the current year has improved by 1.7% over the past 60 days.

Builders FirstSource, Inc. (NASDAQ:BLDR) is a leading supplier and manufacturer of structural and related building products for residential new construction in the United States.

Builders FirstSource has a Zacks Rank #2. The company has expected earnings growth of 0.4% for the current year.

This Could Be the Fastest Way to Grow Wealth in 2019

Research indicates one sector is poised to deliver a crop of the best-performing stocks you'll find anywhere in the market. Breaking news in this space frequently creates quick double- and triple-digit profit opportunities.

These companies are changing the world – and owning their stocks could transform your portfolio in 2019 and beyond. Recent trades from this sector have generated +98%, +119% and +164% gains in as little as 1 month.

Click here to see these breakthrough stocks now >>



Builders FirstSource, Inc. (BLDR): Free Stock Analysis Report

BMC Stock Holdings, Inc. (BMCH): Free Stock Analysis Report

U S Concrete, Inc. (USCR): Free Stock Analysis Report

PulteGroup, Inc. (PHM): Free Stock Analysis Report

NVR, Inc. (NVR): Free Stock Analysis Report

Original post

Zacks Investment Research
5 Stocks To Gain From The Upcoming Housing Recovery
 
5 Stocks To Gain From The Upcoming Housing Recovery

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email