Sunday, March 23, 2014

"One of these days the US real estate market is going to recover, and when it does, you will want to be owning the stock of Lennar Corp. (Symbol LEN)"

Dow Jones Industrial Average 16,065.67 (Down) Week ending 03-14-2014
Dow Jones Industrial Average 16,303.00 (UP) Week ending 03-21-2014

Well, it looks like we are moving from the early recovery phase of the Real Estate market where cash buyers were making the most of the buys from a bloated inventory of houses that included many foreclosures to a more normal housing market with people buying houses with mortgages and the supply of houses is more limited.

One company that will benefit from these conditions is the home builder, Lennar Corp (Symbol LEN, 39.57). 

Think about this. The 30-Year Mortgage national Average interest rate right now is 4.27%, (4.24% in PA.). While this is not at the all time low rate, it is historically a very low interest rate. This rate bodes very well for Lennar's business. 

Lennar Corp.  has a PEG ratio of 1.34 on the Nasdaq web page and a PEG ratio of 0.63 on the website Y-Charts. The 5 year PEG ratio is projected at 1.04. The company has a Return on Equity of 13.05 %. The IBD earnings rating is 98, which is excellent. 

Lennar just reported a stellar quarter here this week with a $.35 cents over $.26 year over year earnings gain. At the same time, Revenues rose 37.69% in the quarter. The stock rose up to $42.00 per share this week, but the market turbulence at the end of the week pushed everything back, so a good buy price right now here at $39.57. 

The company is projecting for 2014 $2.46 cents per share and for 2015 we are looking at $3.20 and a forward PE of a low 12.68. The one year earnings growth is 21.5% and the 3 year earnings growth is 46.7% and, mind you, this was during a housing recession.

The Current ratio for the company is an amazing 30 to 1. The Quick ratio is a healthy 1.69 to 1.

I think if you just get a little pricing power back into this real estate market and just a little rise in the prices of properties, it will greatly help the earnings of Lennar, who also is an investor in properties with their Rialto Capital Management group.

Looks good to me. Sit down and have a sandwich and a beer in your new Lennar built kitchen.

Enjoy your beginning of Spring and let's put some money to work in the stock of Lennar Corp. (Symbol LEN) this week.


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