Homes for the Holidays
The US housing market may have actually hit a bottom and is now dragging itself up to its feet. And if that's the case, the four stocks below may benefit a great deal, observes Stephen Leeb of The Complete Investor.
The Federal Reserve will continue to buy mortgages, keeping long-term interest rates exceptionally low. Existing home sales have continued to improve from their 2010 lows. And while home prices are starting to rise, they still remain affordable by historical standards.
With these factors working in their favor, it’s not surprising that housing stocks have been outstanding performers in the past year or so—with plenty of upside room to grow. Here's a look at our favorites.
Home builder NVR (NVR) is a truly outstanding pure play in housing with no debt, healthy free cash flow, and excellent growth prospects. This extremely well-run company managed to remain profitable throughout the housing sector crash and is now well positioned to thrive during the sector’s revival.
We also like real estate developer Toll Brothers (TOL), whose operations are centered on luxury residential communities in 21 states across the US. This segment of the market has been the most resilient in the housing downturn, and should likewise fare best as the sector recovers.
In the “related companies” category, Wells Fargo (WFC) is a strong pick as the nation’s largest originator of mortgages, with Warren Buffett being the company’s biggest shareholder.