Meritage Homes Corporation ( MTH Quick Quote MTH - Free Report) — the fifth largest homebuilder in the United States — has unveiled its expansion into Jacksonville, FL. The company's entry into this growing market reflects its strategy of spec building entry-level homes and streamlining operations. Jacksonville continues to attract new homeowners seeking an appealing environment with an affordable cost of living, making it an ideal location for MTH's expansion. The company's upcoming communities will provide a range of floorplans for single-family detached and attached homes, offering entry-level buyers convenient locations, energy-efficient amenities, smart technologies, and high-end finishes. Focus on Entry-Level Buyers
In the past year, shares of Meritage Homes have increased 79% compared with the Zacks
Building Products - Home Builders industry’s 68.9% rise. The company is benefiting from improved cycle times, spec strategy implementation and a normalizing housing demand environment. Also, focus on first-time/entry-level buyers bodes well. Image Source: Zacks Investment Research
Meritage Homes is focused on the growing demand for entry-level homes with its LiVE.NOW product that addresses the need for lower-priced homes, given the rising interest rates and home prices. The company is continuously building homes on a spec basis for LiVE.NOW. communities.
Spec homes are built on a speculative basis with no prior buyer lineup. These move-in-ready homes align with efficient construction quality standards, in-demand features and amenities. This strategic initiation allows the company to maintain a comparatively lower average selling price than the market, resulting in increased demand. In the second quarter, about 90% of the company’s backlog conversion was stimulated by its spec strategy, resulting in an all-time highest second-quarter home closings of 3,490 units and home closing revenues of $1.54 billion. MTH’s strategy of capitalizing on the solid demand for entry-level and first move-up homes will likely produce a higher volume in the future. Entry-level buyers comprised 85% of second-quarter 2023 sales orders. In the quarter, the cancellation rate was 12%, down sequentially from 15% and year over year from 13%. Zacks Rank & Other Key Picks
Meritage Homes currently sports a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks from the Zacks Construction sector are: Boise Cascade Company ( BCC Quick Quote BCC - Free Report) sports a Zacks Rank #1. BCC has a trailing four-quarter earnings surprise of 25.5% on average. Shares of BCC have gained 74.5% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here. The Zacks Consensus Estimate for BCC’s 2023 sales and earnings per share (EPS) indicates a decline of 20.1% and 45.5%, respectively, from the year-ago period’s levels. EMCOR Group, Inc. ( EME Quick Quote EME - Free Report) flaunts a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 17.2%, on average. Shares of EME have risen 84.8% in the past year. The Zacks Consensus Estimate for EME’s 2023 sales and EPS suggests growth of 11.7% and 36.2%, respectively, from the year-ago period’s levels. TopBuild Corp. ( BLD Quick Quote BLD - Free Report) flaunts a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 14.1%, on average. Shares of BLD have surged 62.4% in the past year. The Zacks Consensus Estimate for BLD’s 2023 sales and EPS indicates gains of 3.3% and 6.1%, respectively, from the year-ago period’s levels.