Before you cast aspersions, go listen to the DHI conference call embedded below.
You know that I am biased, favouring names like BZH, HOV, FBHS and USG. But there are at least 25 names that will rise as the housing market recovers. It’s simply a matter of mathematics, as America’s population increases, the need for more homes increases. We should build over 1 million homes in 2013, up from 750k in 2012. However, to get to a normalized market, we need to get up to 1.5 million.
Do you have any idea how high USG’s stock price will be if we get to 1.5 million new builds?
Ask Warren Buffett, the second largest shareholder of the company.
Here is a list of 16 names that fit a specific criteria, from my ‘Housing Resurgence’ screen inside of The PPT.
I searched for companies with positive earnings growth, 15%+ quarterly revenue growth, alongside 6 month and YTD share price performance stats.
It’s worth noting, ELLI, has become a battleground stock, despite their fantastic numbers. I suspect the stock will remain under pressure until earnings are reported in mid-February.
BTW: Your best possible trade here is to buy actual property, due to leverage.
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Why builders over RIETs?
REITs I.e..
Builders are pure plays with higher beta
Le Fly and Buffet. Never saw that team coming.
Would you buy a house that has a power line over the back yard? Not a pole, just the line? Awesome deal on this house, just a barbaric power line in the yard.
While the power line poses very little hazard to your health, I’d avoid because when it comes time to sell, that will be an issue.
Just did this analysis and came to the same conclusion. Evidence of harm, weak. Resale issue later, huge.
Quality stuff here. Margin control, large land ownership, control of material cost including lumber.
This is awesome.
Fly what is your next AOL type pick? I read up on your history and was very impressed not only at your trials and tribulations but your early investments. You topped it all off by a high quality ability to put it in words. Lets find the less than 1 billion dollar small cap that goes to 50 billion in a few short years. You seem to have a fondness for turnaround plays, which I like as well.
Always on the hunt. When I find you, I will post it.
AMZN has a P/E multiple of 3,749!
Anyone else think that’s a bit rich?
Meanwhile NIKKEI is up almost 2% today!
#SAMURAI
Apparently PE means nothing anymore. AAPL has a PE of 9, or something hilarious like that. Yes, I know, different businesses, but still.
This trade is so hard to embrace. Know more than a few that are land rich and cash poor. On paper it looks fantastic until you need to find a buyer any time soon. USG sounds okay. The money hoard buying the bust must fix up the disasters to then rent.
fake amish- yes, but price pays.
I like USG based upon that call. I haven’t looked into them but it makes sense. There’s an interesting thought I took away from the beginning missive that required an attentive ear. The one guy said that ASP was up due to pricing power but was also a result of INCREASED SQUARE FOOTAGE. If you have an increase in square footage throughout your new inventory, that means MOAR wallboard. If customers are valuing new large homes that are currently in low inventory over existing homes, that also translates into a refurb cycle for existing inventory which is good for those associated stocks like HD, LOW, USG, AMWD, etc.
Not sure why RYL wasn’t mentioned, especially with their earnings last night. Established a position mid 2012 and it hasnt looked back since. A lot of these names need a little time to cool off and when we pullback and fill that SPX gap I’m going on a buying spree in this sector!