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The U.S. economy looks like it's getting stronger. Just this week, the GDP for last quarter was adjusted upward to 4.2% for the quarter. That almost doubled GDP in Q1.
While that expansion hasn't filtered down to workers yet, it does show that companies are back on track and hiring. This is looking like the final stage of recovery that the U.S. has been waiting for since the financial crisis a decade ago.
There are also signs that consumers are in a good spot financially to look to purchase homes - and not just the upper income consumers that have been able to borrow.
Now, less-liquid consumers with growing savings can now get financing to move into their new homes.
The housing stocks to buy below are the sharp tip of the spear for this long-term trend. This lull is the perfect time to step in.
Housing Stocks to Buy: Cavco (CVCO)
Cavco Industries (NASDAQ: CVCO ) is a homebuilder that also has a couple unique niches. One is it builds cabins in parks and campgrounds. The other is, it builds housing for the U.S. military.
It also has a number of housing brands for its manufactured and modular housing options.
Begun in 1965 and headquartered in Phoenix, Ariz., CVCO has operations around the U.S. It also has a financial arm that offers financing and property insurance.
CVCO is an ideal play if you're looking for an established builder that is focused on the starter home side of the market.
Housing Stocks to Buy: LGI Homes (LGIH)
LGI Homes (NASDAQ: LGIH ) is primarily a homebuilding stock focused on the starter home end of the market, which includes both townhomes and detached homes. It operates in Texas, Arizona, Florida, Georgia, New Mexico, South Carolina, North Carolina, Colorado, Washington, Tennessee and Minnesota.
As a matter of fact, LGIH just added to its footprint in the North Carolina tech corridor called the Triad by purchasing local builder Wynn Homes of Creekmore for $80 million earlier this month.
Bigger builders are using the lull in the market to step in and buy smaller firms that are looking to cash out at this point. The smaller firms are happy to take a payday now instead of waiting for the next leg. And LGIH gets more opportunities in a market that has strong long-term potential.
Housing Stocks to Buy: Lennar (LEN)
Lennar Corporation (NYSE: LEN ) is one of the top homebuilders in the U.S. It has been around since 1954, and now services 21 states and 49 of the top U.S. home markets in those states.
It also offers a variety of options, from detached first homes to luxury homes to senior living options.
This diversity allows LEN to choose which elements of the market are working best and concentrating activities on those sectors. It doesn't have to wait for the whole market to rise, it can take advantage of each subsector.
LEN has tread water in the past year, coming down recently as housing numbers cooled over the summer. But that just makes this a better time to buy.
Housing Stocks to Buy: DR Horton (DHI)
DR Horton (NYSE: DHI ) operates in 26 states and 79 markets across the U.S. It builds everything from detached single-family homes to condominiums.
DHI stock is up more than 20% in the past year due to the fact that it's servicing newer home buyers and consumers who are looking to buy investment properties as rentals in markets that are growing quickly.
The demand for apartments and townhouses in expanding economies is big, and smart investors can take advantage of people moving to these markets by offering rentals to the newcomers.
These properties are also ideal for people looking to swap a lease for a mortgage as well.
Housing Stocks to Buy: Skyline Champion Corporation (SKY)
Skyline Champion Corporation (NYSE: SKY ) is up nearly 150% in the past 12 months, which is pretty stellar growth for any homebuilder.
Part of its attraction has been the fact that it builds more than manufactured and modular homes. It also builds modular buildings for multi-family, hospitality, senior living and workforce housing sectors.
That means it's not just building units to sell, but also properties that will be leased to companies for hotels, senior living centers and employee housing. This offers a different twist on the real estate sector in that SKY caters to new (and old) buyers as well as organizations that are setting up long-term leases for properties.
Housing Stocks to Buy: Comstock Holding Companies (CHCI)
Comstock Holding Companies Inc (NASDAQ: CHCI ) isn't a big company. But it builds in one of the hottest real estate areas in the U.S. - the Washington, D.C., area. And D.C. is not hot simply because it's the nation's capitol and there are a lot of government workers.
It's hot because every manner of business that lobbies the U.S. government for contracts or business has entire divisions of workers in the metropolitan area as well.
All the big defense contractors are there, as are the energy companies, internet firms and telecommunication firms, as well as lobbying groups like the NRA, Red Cross … you name it.
And CHCI builds everything from single-family homes to mixed-use (commercial and residential) properties. There's only so much real estate inside (and outside) the Beltway and people pay for proximity. That's why CHCI stock is up more than 60% and it's still going strong.
Housing Stocks to Buy: MDC Holdings (MDC)
MDC Holdings (NASDAQ: MDC ) is basically a holding company that has a handful of subsidiaries that have vertically integrated the homebuilding, home buying and home protection processes.
Its Richmond American Home subsidiary builds single-family homes in 10 high-growth states around the country. HomeAmerican Mortgage Company does the financing for the homes. American Home Title and Escrow Company handles the homebuying paperwork. And American Home Insurance Agency handles the insurance on the property.
This kind of one-stop shopping can make things easy on the new home buyer, and it helps MDC diversify its business, so it can make money from different aspects of the process depending upon economic conditions.
Housing Stocks to Buy: Century Communities (CCS)
Century Communities (NYSE: CCS ) builds single-family homes, townhomes, condominiums and flats in select metropolitan locations in 12 states across the West, Mountain, Texas and Southeast Regions.
Single-family homes are in the mid-to-upper ranges in some of the faster-growing cities in the states CCS operates in.
While it's a relatively new company, it has built a solid reputation in the industry, and at an $875 million market cap it is at the perfect size to be able to take advantage of strong economy. And, it's also a great size to be scooped up by a larger builder looking to consolidate its market share in good growth markets.
Housing Stocks to Buy: PulteGroup (PHM)
PulteGroup (NYSE: PHM ) is one of the leading U.S. builders, with a market cap around $8 billion. It has been building homes for nearly 70 years.
And right now PHM stock is a great value play on top of being one of the best housing stocks you can own. It builds houses that span the entire housing experience, from simple starters to high-end mansions.
PHM is now in 67 markets in 29 states, as well as having operations in Mexico and South America. And the grandson of the founder still sits on the board, which goes to show that throughout its growth over the past 7 decades, the original ethos of the company remains. This is a rare thing in such a competitive industry, especially when you see the value and growth that still remains for PHM.
Louis Navellier is a renowned growth investor. He is the editor of four investing newsletters: Growth Investor , Breakthrough Stocks , Accelerated Profits and Platinum Growth . His most popular service, Growth Investor, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com . Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.Compare Brokers
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