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Zacks Value Trader Highlights: Century Communities, M/I Homes, Meritage Homes, PulteGroup and Taylor Morrison Home
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For Immediate Release
Chicago, IL – September 23, 2024 – Zacks Value Investor is a podcast hosted weekly by Zacks Stock Strategist Tracey Ryniec. Every week, Tracey will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life. To listen to the podcast, click here: https://www.zacks.com/stock/news/2339394/the-fed-is-cutting-time-to-buy-the-cheap-homebuilder-stocks)
The Fed Is Cutting: Time to Buy the Cheap Homebuilding Stocks
Welcome to Episode #383 of the Value Investor Podcast.
(0:30) - Where Should Value Investors Be Looking After The Fed Cuts?
(6:20) - Are The Homebuilders Going To Benefit From The Recent Fed Meeting?
(17:50) - Tracey’s Top Stock Picks For Your Watchlist
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
The Federal Reserve has finally started cutting interest rates. It announced a 50-basis point cut in Sep 2024.
Fed rate cuts usually impact mortgage rates, although mortgage rates had already been falling heading into the latest FOMC meeting. 30-year fixed mortgage rates have fallen about a point to 6.14% from 7.24%.
This means more buyers can afford a home. As long as the employment market remains stable, home sales should rise in 2025.
Homebuilders Stocks Soar but are Still Cheap
The homebuilder stocks have soared in 2024 as demand remained strong for new homes and in anticipation of mortgage rates falling and home sales rising.
Most of the homebuilders trade with forward price-to-earnings (P/E) ratios under 12. This is extremely cheap as the S&P 500 is trading at 19.9.
Is there still more gas left in the tank with these stocks?
Screening for Top Homebuilder Stocks
The homebuilders have their own industry so you can set up a screen that looks for stocks in that industry with a Zacks Rank of #1 (Strong Buy) or #2 (Buy). Those are the top two Zacks recommendations.
There are 16 stocks in the homebuilder industry on Zacks. At the time of the podcast recording, only one was a Zacks Rank #1 (Strong Buy) and 4 are #2 (Buy) stocks.
All 5 of them are also cheap, even without screening for price-to-earnings (P/E) or some other valuation metric.
Century Communities is one of the nation's largest homebuilders with a market cap of $3.3 billion. It recently became a top 5 builder in Houston but serves many markets. In the second quarter of 2024, net new contracts were up 20% year-over-year and that was before the Fed cut rates.
Shares of Century Communities have soared 53% over the last year but it's still cheap with a forward P/E of just 9.8.
Century Communities is a Zacks Rank #1 (Strong Buy) stock.
Should Century Communities be on your homebuilder short list?
M/I Homes is a national homebuilder with a market cap of $4.6 billion. In the second quarter of 2024, gross margins rose to 28% from 25% in the prior year's quarter.
Shares of M/I Homes have jumped 87% in the last year. It is still dirt cheap however. M/I Homes trades with a forward P/E of just 8.4.
At the time of the recording of the podcast. M/I Homes was a Zacks #2 (Buy) stock but is now a #1 (Strong Buy) stock.
Should M/I Homes be on your homebuilder short list?
Meritage Homes is the 5th largest homebuilder in the United States. It has a market cap of $7.4 billion.
Shares of Meritage Homes have gained 56% in the last year. But it, too, remains dirt cheap with a forward P/E of just 9.7. Meritage Homes also pays a dividend, yielding 1.5%.
Meritage Homes is a Zacks Rank #2 (Buy) stock.
Should Meritage Homes be on your homebuilder short list?
PulteGroup is the largest publicly traded homebuilder in the United States with a market cap of $29.2 billion. It builds under the Centex, Pulte and Del Webb brands, among others. Last quarter, it had an incredible gross margin of 29.9%.
Shares of PulteGroup have soared 84% in the last year, hitting new highs. Yet it remains attractively priced with a forward P/E of 10.5. Pulte pays a dividend, yielding 0.6%. It also has a share repurchase program.
Pulte is a Zacks Rank #2 (Buy) stock.
Should the large homebuilders like Pulte be on your short list?
Taylor Morrison Home is a large homebuilder with a market cap of $7.3 billion. In the second quarter, it had closing adjusted gross margins of 23.9%.
Shares of Taylor Morrison Home are up 55% in the last year. Yet it remains cheap, with a forward P/E of 8.7. The company does not pay a dividend, but Taylor Morrison Home does have a share repurchase plan.
Taylor Morrison is a Zacks Rank #2 (Buy) stock.
Should Taylor Morrison Home be on your homebuilder short list?
What Else Should You Know About the Cheap Homebuilder Stocks?
Tune into this week's podcast to find out.
[In full disclosure, Zacks Value Investor portfolio owns shares of PHM.]
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros.
Follow us on Twitter: https://twitter.com/zacksresearch
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Zacks Value Trader Highlights: Century Communities, M/I Homes, Meritage Homes, PulteGroup and Taylor Morrison Home
For Immediate Release
Chicago, IL – September 23, 2024 – Zacks Value Investor is a podcast hosted weekly by Zacks Stock Strategist Tracey Ryniec. Every week, Tracey will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life. To listen to the podcast, click here: https://www.zacks.com/stock/news/2339394/the-fed-is-cutting-time-to-buy-the-cheap-homebuilder-stocks)
The Fed Is Cutting: Time to Buy the Cheap Homebuilding Stocks
Welcome to Episode #383 of the Value Investor Podcast.
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
The Federal Reserve has finally started cutting interest rates. It announced a 50-basis point cut in Sep 2024.
Fed rate cuts usually impact mortgage rates, although mortgage rates had already been falling heading into the latest FOMC meeting. 30-year fixed mortgage rates have fallen about a point to 6.14% from 7.24%.
This means more buyers can afford a home. As long as the employment market remains stable, home sales should rise in 2025.
Homebuilders Stocks Soar but are Still Cheap
The homebuilder stocks have soared in 2024 as demand remained strong for new homes and in anticipation of mortgage rates falling and home sales rising.
Most of the homebuilders trade with forward price-to-earnings (P/E) ratios under 12. This is extremely cheap as the S&P 500 is trading at 19.9.
Is there still more gas left in the tank with these stocks?
Screening for Top Homebuilder Stocks
The homebuilders have their own industry so you can set up a screen that looks for stocks in that industry with a Zacks Rank of #1 (Strong Buy) or #2 (Buy). Those are the top two Zacks recommendations.
There are 16 stocks in the homebuilder industry on Zacks. At the time of the podcast recording, only one was a Zacks Rank #1 (Strong Buy) and 4 are #2 (Buy) stocks.
All 5 of them are also cheap, even without screening for price-to-earnings (P/E) or some other valuation metric.
5 Cheap Homebuilder Stocks to Buy Now
1. Century Communities, Inc. (CCS - Free Report)
Century Communities is one of the nation's largest homebuilders with a market cap of $3.3 billion. It recently became a top 5 builder in Houston but serves many markets. In the second quarter of 2024, net new contracts were up 20% year-over-year and that was before the Fed cut rates.
Shares of Century Communities have soared 53% over the last year but it's still cheap with a forward P/E of just 9.8.
Century Communities is a Zacks Rank #1 (Strong Buy) stock.
Should Century Communities be on your homebuilder short list?
2. M/I Homes, Inc. (MHO - Free Report)
M/I Homes is a national homebuilder with a market cap of $4.6 billion. In the second quarter of 2024, gross margins rose to 28% from 25% in the prior year's quarter.
Shares of M/I Homes have jumped 87% in the last year. It is still dirt cheap however. M/I Homes trades with a forward P/E of just 8.4.
At the time of the recording of the podcast. M/I Homes was a Zacks #2 (Buy) stock but is now a #1 (Strong Buy) stock.
Should M/I Homes be on your homebuilder short list?
3. Meritage Homes Corp. (MTH - Free Report)
Meritage Homes is the 5th largest homebuilder in the United States. It has a market cap of $7.4 billion.
Shares of Meritage Homes have gained 56% in the last year. But it, too, remains dirt cheap with a forward P/E of just 9.7. Meritage Homes also pays a dividend, yielding 1.5%.
Meritage Homes is a Zacks Rank #2 (Buy) stock.
Should Meritage Homes be on your homebuilder short list?
4. PulteGroup, Inc. (PHM - Free Report)
PulteGroup is the largest publicly traded homebuilder in the United States with a market cap of $29.2 billion. It builds under the Centex, Pulte and Del Webb brands, among others. Last quarter, it had an incredible gross margin of 29.9%.
Shares of PulteGroup have soared 84% in the last year, hitting new highs. Yet it remains attractively priced with a forward P/E of 10.5. Pulte pays a dividend, yielding 0.6%. It also has a share repurchase program.
Pulte is a Zacks Rank #2 (Buy) stock.
Should the large homebuilders like Pulte be on your short list?
5. Taylor Morrison Home Corp. (TMHC - Free Report)
Taylor Morrison Home is a large homebuilder with a market cap of $7.3 billion. In the second quarter, it had closing adjusted gross margins of 23.9%.
Shares of Taylor Morrison Home are up 55% in the last year. Yet it remains cheap, with a forward P/E of 8.7. The company does not pay a dividend, but Taylor Morrison Home does have a share repurchase plan.
Taylor Morrison is a Zacks Rank #2 (Buy) stock.
Should Taylor Morrison Home be on your homebuilder short list?
What Else Should You Know About the Cheap Homebuilder Stocks?
Tune into this week's podcast to find out.
[In full disclosure, Zacks Value Investor portfolio owns shares of PHM.]
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec and she also hosts the Zacks Market Edge Podcast on iTunes.
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros.
Follow us on Twitter: https://twitter.com/zacksresearch
Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch/
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
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support@zacks.com
https://www.zacks.com/performance
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.