Meanwhile, KeyBanc analyst Ken Zenner joined CNBC’s Squawk on the Street on September 28 to discuss homebuilder stocks and their outperformance over the S&P 500. He also added:
What stocks to buy?
Among the stocks Zener is looking to buy in this cycle, the first one mentioned is NVR Inc. (NYSE: NVR), citing high cash flows and return on inventory, claiming that it has a negative 15% net leverage. Additionally, two other stocks the analyst mentioned as his homebuilder’s picks are Lennar (NYSE: LEN) and D.R. Horton (NYSE: DHI); he noted the two firms should profit in an asset-lighter model that homebuilders will be moving towards, according to Zener.
Higher end resilience
Furthermore, the thesis of homebuilders targeting higher-end consumers to be more resilient due to their purchasing power was debunked by the analyst who cited return on inventory as the most critical metric. It seems that there are gains to be made among the homebuilder stocks despite a softening in the real estate market. However, the onus should be on quality inventory and high cash flow to ensure positive returns in the long run. Buy stocks now with Interactive Brokers – the most advanced investment platform Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
