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M.D.C. Holdings (MDC) Surges 42% YTD: Will the Momentum Continue?
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The lack of existing homes for sale and strong demand for housing in the country, fueled by a growing population and favorable demographics, has been supporting the U.S. homebuilding market. Along with other notable homebuilders, shares of Denver, CO-based homebuilder M.D.C. Holdings, Inc. have gained 41.9% this year compared with the Zacks Building Products - Home Builders industry’s 42.3% rise.
The Zacks Consensus Estimate has witnessed an uptrend over the past 30 days as analysts raised their estimates. Over the said time frame, the Zacks Consensus Estimate of $3.55 and $4.06 for 2023 and 2024 has increased 4.7% and 2.3%, respectively.
MDC currently sports a Zacks Rank #1 (Strong Buy) with an impressive VGM Score of A. This helps to identify stocks with the most attractive value, growth and momentum.
Image Source: Zacks Investment Research
What Makes the Stock an Attractive Pick?
Improved Builders’ Sentiment: Builders are now cautiously optimistic for 2023 as the lack of existing inventory is shifting demand to the new home market. Although builders continue to grapple with high construction costs and material supply chain disruptions, they continue to witness strong pent-up demand as buyers turn more to the new home market due to a shortage of existing inventory.
According to a report released on Jun 19 by the National Association of Home Builders, the Monthly Housing Market Index experienced a significant surge, rising by five points to reach 55 in June compared to May. This upward trend in confidence has been sustained for six consecutive months, showcasing a positive outlook for the housing market.
Built-to-Order Approach Gives Competitive Advantage: The company’s Build-to-Order process, also known as “dirt sales”, provides buyers with a wide range of choices in major aspects of their future home and personalized customer experience through in-house community teams. This highly consumer-centric approach helps homebuyers to design a home with the features and amenities of their choice. Also, buyers have the flexibility to customize their options according to their preferences and affordability.
The company limits the number of homes started without a contract, also known as “spec homes”, and follows a strategy of initiating construction only after a purchase agreement has been executed. This reduces inventory risk, enhances efficiencies in construction, and provides greater visibility, as well as predictability on future deliveries. MDC’s build-to-order homes model gives it a competitive edge over its peers.
Focus on First-Time/Move-Up Buyers: MDC remains focused on the growing demand for entry-level homes, addressing the need for lower-priced homes, given affordability concerns prevailing in the U.S. housing market. The company has been reaping benefits from the successful execution of strategic initiatives to boost profitability, with a focus on entry-level homes. In view of these strategic efforts, the growing share of first-time buyers is encouraging, especially post-pandemic.
Other Key Picks
Here are some other top-ranked stocks that investors may consider from the same industry:
PulteGroup Inc. (PHM - Free Report) : The company has been reaping benefits from the successful execution of strategic initiatives to boost profitability, with a focus on entry-level homes. PulteGroup, presently sports a Zacks Rank #1, has jumped 66.4% year to date. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for its 2023 and 2024 earnings has been upwardly revised by 1.9% and 1.8%, respectively, over the past 30 days. Its earnings topped consensus estimates in three of the trailing four quarters and missed once, with the average surprise being 15.6%. Again, it carries an impressive VGM Score of A. This helps to identify stocks with the most attractive value, growth and momentum.
Toll Brothers (TOL - Free Report) : Based in Horsham, PA, this leading builder of luxury homes has gained 52.7% this year.
TOL currently sports a Zacks Rank #1. Earnings estimates for fiscal 2023 have increased to $10.61 per share from $8.66 per share over the past 30 days. The company’s earnings topped the Zacks Consensus Estimate in all the trailing four quarters, the average being 24.4%. Again, it carries an impressive VGM Score of A.
Lennar Corporation (LEN - Free Report) : The company has gained 34.4% this year. Its earnings topped the Zacks Consensus Estimate in all the trailing four quarters, the average being 18.4%.
LEN currently sports a Zacks Rank #1. Earnings estimates for fiscal 2023 have increased to $12.16 per share from $9.96 per share over the past seven days.
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M.D.C. Holdings (MDC) Surges 42% YTD: Will the Momentum Continue?
The lack of existing homes for sale and strong demand for housing in the country, fueled by a growing population and favorable demographics, has been supporting the U.S. homebuilding market. Along with other notable homebuilders, shares of Denver, CO-based homebuilder M.D.C. Holdings, Inc. have gained 41.9% this year compared with the Zacks Building Products - Home Builders industry’s 42.3% rise.
The Zacks Consensus Estimate has witnessed an uptrend over the past 30 days as analysts raised their estimates. Over the said time frame, the Zacks Consensus Estimate of $3.55 and $4.06 for 2023 and 2024 has increased 4.7% and 2.3%, respectively.
MDC currently sports a Zacks Rank #1 (Strong Buy) with an impressive VGM Score of A. This helps to identify stocks with the most attractive value, growth and momentum.
Image Source: Zacks Investment Research
What Makes the Stock an Attractive Pick?
Improved Builders’ Sentiment: Builders are now cautiously optimistic for 2023 as the lack of existing inventory is shifting demand to the new home market. Although builders continue to grapple with high construction costs and material supply chain disruptions, they continue to witness strong pent-up demand as buyers turn more to the new home market due to a shortage of existing inventory.
According to a report released on Jun 19 by the National Association of Home Builders, the Monthly Housing Market Index experienced a significant surge, rising by five points to reach 55 in June compared to May. This upward trend in confidence has been sustained for six consecutive months, showcasing a positive outlook for the housing market.
Built-to-Order Approach Gives Competitive Advantage: The company’s Build-to-Order process, also known as “dirt sales”, provides buyers with a wide range of choices in major aspects of their future home and personalized customer experience through in-house community teams. This highly consumer-centric approach helps homebuyers to design a home with the features and amenities of their choice. Also, buyers have the flexibility to customize their options according to their preferences and affordability.
The company limits the number of homes started without a contract, also known as “spec homes”, and follows a strategy of initiating construction only after a purchase agreement has been executed. This reduces inventory risk, enhances efficiencies in construction, and provides greater visibility, as well as predictability on future deliveries. MDC’s build-to-order homes model gives it a competitive edge over its peers.
Focus on First-Time/Move-Up Buyers: MDC remains focused on the growing demand for entry-level homes, addressing the need for lower-priced homes, given affordability concerns prevailing in the U.S. housing market. The company has been reaping benefits from the successful execution of strategic initiatives to boost profitability, with a focus on entry-level homes. In view of these strategic efforts, the growing share of first-time buyers is encouraging, especially post-pandemic.
Other Key Picks
Here are some other top-ranked stocks that investors may consider from the same industry:
PulteGroup Inc. (PHM - Free Report) : The company has been reaping benefits from the successful execution of strategic initiatives to boost profitability, with a focus on entry-level homes. PulteGroup, presently sports a Zacks Rank #1, has jumped 66.4% year to date. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for its 2023 and 2024 earnings has been upwardly revised by 1.9% and 1.8%, respectively, over the past 30 days. Its earnings topped consensus estimates in three of the trailing four quarters and missed once, with the average surprise being 15.6%. Again, it carries an impressive VGM Score of A. This helps to identify stocks with the most attractive value, growth and momentum.
Toll Brothers (TOL - Free Report) : Based in Horsham, PA, this leading builder of luxury homes has gained 52.7% this year.
TOL currently sports a Zacks Rank #1. Earnings estimates for fiscal 2023 have increased to $10.61 per share from $8.66 per share over the past 30 days. The company’s earnings topped the Zacks Consensus Estimate in all the trailing four quarters, the average being 24.4%. Again, it carries an impressive VGM Score of A.
Lennar Corporation (LEN - Free Report) : The company has gained 34.4% this year. Its earnings topped the Zacks Consensus Estimate in all the trailing four quarters, the average being 18.4%.
LEN currently sports a Zacks Rank #1. Earnings estimates for fiscal 2023 have increased to $12.16 per share from $9.96 per share over the past seven days.