The Zacks Analyst Blog Highlights: CalAtlantic, D.R. Horton, PulteGroup, Beacon Roofing and Lumber Liquidators
For Immediate Release
Chicago, IL – January 25, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include CalAtlantic Group, Inc. CAA, D.R. Horton, Inc. DHI, PulteGroup Inc. PHM, Beacon Roofing Supply, Inc. BECN and Lumber Liquidators Holdings, Inc. LL.
Here are highlights from Wednesday’s Analyst Blog:
5 Amazing Housing Stocks to Buy Ahead of Q4 Earnings
The U.S. housing industry has just come off a great year. A last minute boost was the icing on the cake, with homebuilding optimism hitting a record level on the tax cuts announcement. In the first month of 2018, buyer demand and homebuilder optimism look strong. And these factors remain in place despite a disappointing read for housing starts for December.
In fact, cumulative housing numbers for 2017 are quite impressive and indicate that another strong year for the industry is in the offing. Investing in stocks from the sector looks like an increasingly profitable option at this point.
U.S. Housing Had a Great 2017
According to real estate database firm Zillow, the value of U.S. housing stock as a whole increased by 6.5% or $2 trillion in 2017. This takes the total value of all homes located within the United States to $31.8 trillion. This increase in cumulative housing value was the fastest recorded since 2013, a time when the sector was still recovering from the Great Recession.
As of now, Los Angeles is the most valuable housing market in the country, accounting for a total value of $2.7 trillion. Data from Zillow also reveals that New York comes in second with a cumulative value of $2.6 trillion. In fact, the 10 most highly valued metro areas make up around 36% of the cumulative value of U.S. housing.
This increase was primarily due to a spike in prices and a concurrent shortage in housing supply. According to real estate data provider Redfin, U.S. home prices increased by 7% over 2017 to a median sales price of $284,500.
Meanwhile, sales registered a 1.7% increase over 2016 while only 2.6 months of supply was reported in December. Such a state of supplies indicates that the market is heavily skewed in favor of sellers.
Prospects Remain Strong Although Starts Decline
Meanwhile, the year started with a disappointing reading for housing starts numbers. According to the Department of Commerce, housing starts declined by 8.2% in December, the largest percentage drop recorded since Nov 2016. However, industry watchers believe that the downturn experienced in December is likely to be temporary. Further, housing possibly felt the chill from December’s brutally low temperatures.
Optimists point toward the 2.4% increase in homebuilding to 1.202 million units in 2017. This is the highest level recorded in a decade. Strong economic growth, a robust labor market and tax cuts are continuing to bolster the housing industry.
Future demand is also likely to remain strong given the shortage in supply of existing homes. Also, homebuilders are not planning more speculative homes. These are units which still do not have a buyer. And this phenomenon has not been witnessed since the last housing boom which preceded the recession of 2008.
It would be best to ignore the recent poor reading of housing starts given that several positives remain in place for the sector. Homebuilding sentiment continues to linger near the 18-year high hit in December. Further, buyer demand remains high even as supplies constraints continue to exist, skewing the market heavily in favor of sellers. Taken together, these factors ensure that housing stocks remain a strong investment option in 2018.
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You could further narrow down the list of choices by looking at stocks that have a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.
CalAtlantic Group, Inc. operates as a homebuilder in the United States. The company offers crafted homes.
CalAtlantic has beaten the Zacks Consensus Estimate in two of the last four quarters with an average positive earnings surprise of 5.6%.
Powered with the right combination of the two key ingredients – an Earnings ESP of +0.27% and a Zacks Rank of 1 – our proven model shows that an earnings beat is expected for Humana in the to-be-reported quarter as well.
The company is expected to report fourth-quarter 2017 results on Feb 14.
D.R. Horton, Inc., based in Texas, is one of the leading national homebuilders, primarily engaged in the construction and sale of single-family houses both in the entry-level and move-up markets.
D.R. Horton has beaten the Zacks Consensus Estimate for the last four consecutive quarters with an average positive earnings surprise of 5%.
Powered with the right combination of the two key ingredients – an Earnings ESP of +4.77% and a Zacks Rank of 2 – our proven model shows that an earnings beat is expected for D.R. Horton in the to-be-reported quarter as well.
The company is expected to report fiscal first-quarter 2018 results on Jan 31.
PulteGroup Inc. engages in the homebuilding and financial services businesses primarily in the United States.
PulteGroup has beaten the Zacks Consensus Estimate for the last four consecutive quarters with an average positive earnings surprise of 8.1%.
Powered with the right combination of the two key ingredients – an Earnings ESP of +2.01% and a Zacks Rank of 2 – our proven model shows that an earnings beat is expected for PulteGroup in the to-be-reported quarter as well.
The company is expected to report fourth-quarter 2017 results on Jan 30.
Beacon Roofing Supply, Inc. is the second-largest distributor of residential and non-residential roofing materials in the United States and Canada.
Beacon Roofing Supply has beaten the Zacks Consensus Estimate in two of the last four quarters with an average positive earnings surprise of 6.4%.
Powered with the right combination of the two key ingredients – an Earnings ESP of +2.76% and a Zacks Rank of 2 – our proven model shows that an earnings beat is expected for Beacon Roofing in the to-be-reported quarter as well.
The company is expected to report fiscal first-quarter 2018 results on Feb 1.
Lumber Liquidators Holdings, Inc. is a specialty retailer of hardwood flooring and related products.
Lumber Liquidators has beaten the Zacks Consensus Estimate in three of the last four quarters with an average positive earnings surprise of 113.5%.
Powered with the right combination of the two key ingredients – an Earnings ESP of +49.33% and a Zacks Rank of 2 – our proven model shows that an earnings beat is expected for Lumber Liquidators in the to-be-reported quarter as well.
The company is expected to report fourth-quarter 2017 results on Feb 20.
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Beacon Roofing Supply, Inc. (BECN): Free Stock Analysis Report
Lumber Liquidators Holdings, Inc (LL): Free Stock Analysis Report
PulteGroup, Inc. (PHM): Free Stock Analysis Report
D.R. Horton, Inc. (DHI): Free Stock Analysis Report
CalAtlantic Group, Inc. (CAA): Free Stock Analysis Report
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