We’ve seen lots of ups and downs in the market over the past month, but homebuilding stocks have managed to avoid this trend, for the most part. In fact, the Residential Construction Industry has seen excellent growth over the past year, and many of the stocks in this industry, including today’s recommendation, have taken advantage of this strength.
DR Horton, Inc. (DHI) is a homebuilding company, and it is currently recognized as the largest home construction company in the U.S. Since it was founded more than 35 years ago, the company has expanded from Texas into the Southeast, Mid-Atlantic, West Coast and Southwest. The company is known for its efficiency and has also gained attention by using energy-efficient features in its new homes.
Though DR Horton has experienced some volatility over the past 11 months, it has consistently outperformed its industry (Residential Construction) and the market as a whole. In fact, DHI shares are up nearly 30% year-to-date, while the S&P 500 is up just over 1%.
DHI shares have risen more than 10% in November, and I expect shares to continue to trek upward. Overall, Q4 earnings growth is expected to come in at a 5.1% increase over last year, while Q1 2016 earnings are currently projected to have a 22.5% increase over Q1 2015.
The Turner Analytics database rates DHI as a strong buy. The stock is very strong, both fundamentally (82 out of 100) and technically (92 out of 100), and it has significant near-term upward momentum.
I recommend buying DHI at $32.62 or better. Set your stop at $28.61 and your near-term target at $35.97.
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