5 popular home builder gurus have built positions in

Summary

  • Despite supply chain issues, demand for housing remains strong.
  • These companies are popular among gurus.

As supply chain issues and labor shortages persist for home builders across the country, demand from home buyers continues to be robust.

The National Association of Home Builders / Wells Fargo Housing Market Index reported that builders’ confidence in the single-family home construction market rose four points to 80 in October, which remains positive despite a down from 85 in October last year and from the record high. from 90 in November 2020.

Across the three components of the index, current selling conditions climbed five points to 87, while sales expectations over the next six months increased three points to 84 and buyer traffic increased by four points at 65.

As prices continue to rise to meet rising costs of land, labor and materials, affordability is the primary concern for builders and potential buyers now. The U.S. Census noted that the median price of a newly constructed home sold in August was 20% higher than the same month last year.

Based on these developments, investors can look for good opportunities in which the gurus also see value at the end of the second quarter. According to the Aggregate Portfolio, a Premium feature of GuruFocus, as of October 18, popular home builders among gurus include DR Horton Inc. (DHI, Financial), Lennar Corp.

LEN
. (LEN, Financial), Tri Pointe Homes Inc. (TPH, Financial), PulteGroup Inc.

MPS
(PHM, Financial) and Toll Brothers Inc

TOL
. (TOL, Financial).

DR Horton

With a combined equity portfolio weighting of 15.98%, 15 gurus are invested in DR Horton (DHI, Financial).

The Fort Worth, Texas-based homebuilding company has a market cap of $ 31.43 billion; its shares were trading at around $ 87.82 on Monday with a price-to-earnings ratio of 8.8, a price-to-book ratio of 2.28 and a price-to-sell ratio of 1.24.

The GF value line suggests that the stock is currently valued at fair value based on historical ratios, past performance and future earnings projections.

GuruFocus has rated DR Horton’s financial strength at 5 out of 10. Although the company has issued approximately $ 1.2 billion in new long-term debt over the past three years, it is at a manageable level. The rugged Altman Z-Score of 6.2 also indicates it’s in good standing. Return on invested capital dwarfs the weighted average cost of capital, so value is created as the business grows.

The company’s profitability was rated 8 out of 10, driven by expanding operating margin, returns on equity, assets and capital that outperform the majority of its competitors, a Piotroski F- High score of 7 out of 9, implying healthy trading conditions, and a predictability rating of 3.5 out of five stars. According to GuruFocus, companies with this rank are reporting an average of 9.3% per year over a 10-year period.

Among the gurus invested in DR Horton, Georges soros (Trades, Portfolio) holds the largest stake with 1.1% of its outstanding shares. David tepper (Trades, Portfolio), Pioneer Investments, the Smead Value Fund (professions, portfolio), Jeremy grantham (professions, portfolio), Ray dalio (professions, portfolio), Ken fisher (professions, portfolio), Ron baron (professions, portfolio), Paul Tudor Jones (Trades, Portfolio) and several other gurus own the stock as well.

Lennar

Fourteen gurus have positions in Lennar (LEN, Financial), representing a combined weight of 12.87%.

The Miami-headquartered homebuilder has a market cap of $ 30.07 billion; its shares were trading at around $ 99.36 on Monday with a price-to-earnings ratio of 7.53, a price-to-book ratio of 1.5 and a price-to-sell ratio of 1.2.

According to the GF Value Line, the stock currently appears to be significantly overvalued.

Lennar’s financial strength has been rated 5 out of 10 by GuruFocus. As assets accumulate at a faster rate as income grows, the Altman Z-Score of 4.23 indicates the business is in good standing. ROIC also eclipses WACC, indicating good value creation.

The company’s profitability fared even better with a score of 8 out of 10, driven by expanding margins, strong returns that outperform industry peers, a high Piotroski F-Score of 8 and a predictability ranking. three stars because revenue and profit growth has been consistent. GuruFocus data shows that companies in this rank are reporting an average of 8.2% per year.

With a 0.92% stake, Barrow, Hanley, Mewhinney & Strauss is the company’s largest shareholder guru. Other gurus invested in the action include the Smead Value Fund (Trades, Portfolio), Fisher, Pioneer Investments, Dalio, Grantham, Baron, Third avenue management (professions, portfolio), Ronald Mühlenkamp (trades, portfolio) and John hussman (trades, portfolio).

Tri Pointe Houses

With a combined portfolio weight of 1.7%, 12 gurus have positions in Tri Pointe Homes (TPH, Financial).

The Incline Village, Nevada-based home builder has a market cap of $ 2.66 billion; its shares were trading at around $ 23.99 on Monday with a price-to-earnings ratio of 7.68, a price-to-book ratio of 1.23 and a price-to-sell ratio of 0.8.

Based on the GF value line, the stock appears to be currently valued at fair value.

GuruFocus rated Tri Pointe’s financial strength at 4 out of 10. Although the cash-to-debt ratio underperforms more than half of other industry players, the company has a high Altman Z-Score of 3.74. The ROIC also exceeds the WACC, indicating that value is created.

The profitability of the company is faring better, scoring a 7 out of 10. Despite a declining operating margin, Tri Pointe is supported by strong returns that are more than half out of the competition. He also has a high Piotroski F-Score of 8.

Fisher is the company’s largest shareholder guru with 0.79% of its shares outstanding. Grantham, Hotchkis & Wiley, Chuck royce (professions, portfolio), Third avenue management (professions, portfolio), Murray Stahl (professions, portfolio), Jim simons (Trades, Portfolio) ‘Renaissance Technologies and Hussman, among others, also have positions in the title.

Pulte Group

In total, 11 gurus hold a position in PulteGroup (PHM, Financial), with a combined weighting of the equity portfolio of 4.38%.

The Atlanta-based home construction company has a market cap of $ 12.77 billion; its shares were trading at around $ 49.20 on Monday with a price-to-earnings ratio of 7.96, a price-to-book ratio of 1.84 and a price-to-sell ratio of 1.06.

The GF value line suggests that the stock is currently valued at fair value.

PulteGroup’s financial strength and profitability were both rated 7 out of 10 by GuruFocus. Along with a comfortable level of interest coverage, the Altman Z-Score of 4.27 indicates the company is in good standing. The ROIC is also above the WACC, indicating that value is being created.

The company also has an expanding operating margin, strong returns that outperform the majority of its industry peers, and a high Piotroski F-Score of 7. PulteGroup has one-star predictability. GuruFocus claims that companies with this rank return an average of 1.1% per year.

Among the gurus invested in PulteGroup, Tepper holds the largest stake with 0.58% of the shares outstanding. Grantham, the firm of Simons, Pioneer Investments, Royce, Dalio and Richard Snow (Trades, Portfolio) also hold the share.

Toll brothers

With a combined equity portfolio weighting of 0.37%, Toll Brothers (TOL, Financial) is owned by 10 gurus.

The Fort Washington, Pa.-Based home builder has a market cap of $ 7.27 billion; its shares were trading at around $ 59.65 on Monday with a price-to-earnings ratio of 11.52, a price-to-book ratio of 1.44 and a price-to-sell ratio of 0.91.

According to the GF Value Line, the stock is currently valued at its fair value.

GuruFocus rated Toll Brothers’ financial strength at 4 out of 10. Although debt ratios underperform the industry, it has a high Altman Z-Score of 3.23.

The financial strength of the company is doing better with a score of 7 out of 10. Although the operating margin is declining, Toll Brothers’ returns are outperforming about half of its competitors. He also has a high Piotroski F-Score of 7 and a predictability rank of one star.

With a 0.15% stake, Pioneer Investments holds the largest position in Toll Brothers among the gurus. Baron, Royce, Dalio, Fisher, Jones and several other gurus also have positions in the stock.


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