Housebuilders & The Santa Claus Rally
Consumer Discretionary
Will it work this year? Yes! - sector expert, Alex Barron, explains why the fundamental set-up for builders is so compelling and believes the trade could outperform historical averages: 3-month hold (Nov 1-Jan 31), HB Index Avg. Return 20.2% (74% success rate in last 34 years); 2-month hold (Dec 1-Jan 31) Avg. Return 15.7% (74% success). Alex also sees substantial upside in the group over the next 12 months (Avg. Return 47.6%). Stocks with the biggest upside include Hovnanian Enterprises, M/I Homes and Meritage Homes.
Edition: 123
- 12 November, 2021
Consumer Discretionary
A "perfect storm" in the housing market since mid-2020 has allowed MTH to generate abnormally high margins in its homebuilding business. Street expectations imply this will continue into 2023 but it is unlikely that MTH can continue to raise home prices and volumes, while keeping its costs flat. Field work in MTH communities indicates demand and pricing growth have slowed significantly. TP $70 (~30% downside)
Edition: 121
- 15 October, 2021