Saturday, June 6, 2015

One side is saying "Bullish herd" of homebuilders on May 26th and on the other side Raymond James downgrades all the housing stocks on on May 15th. Myself, I am willing to put some coin on the stock of Lennar Corp. Cl. A , at the right price.

Dow Jones Industrial Average 18,010.68 (Down) Week ending 05-29-2015
Dow Jones Industrial Average 17,849.00  (Down) Week ending 06-05-2015

I apologize for the lost Month of May on the blog. A weekend working in Washington, DC, a Memorial day driving 1100 miles out to Western Pennsylvania and Wheeling, WV. to a niece's graduation and family get together. Then last weekend finally worked on the backyard garden on Saturday only to get heat exhaustion on Sunday which lead into a week long upper respiratory viral infection. See you really didn't need to know all that, but I didn't want you to think that I am just slacking off. 

While stocks in the US continue to churn and burn and merge and rise, I think a place that is still undervalued is Real Estate. The Federal reserve really can't raise interest rates more than like a quarter percent because of the currency and trade imbalances it creates around the world. The IMF is imploring them not to raise and delay it. Also the United States with it's 18 Trillion dollar debt load cannot afford a large rise in the interest service payments. So this all bodes well for the continuing improvement in the real estate market.

One way to play this trend is to buy a high quality home builder of new houses that are moderately priced to sell easily. Lennar Corp. CL. A (Symbol LEN, $46.71) is just such a stock. 

The stock falls in close to my guidelines on ROE and PEG ratio. The Return on Equity of the stock is 14.49% and the PEG ratio is 1.08.

Q1 Revenue was up 20% over last years first quarter which continues a 3 year trend of strong sales growth. The stock price is up 14.01 % for 1 year and 4.06% YTD. 

Earnings this year are projected at $3.17 per share and for next year $3.60 per share. They also offer a small 0.34% dividend payment

I believe the stock will continue it's long term growth path and should hit my $60.00 price target by the end of next year. That would be a 28% return over the next year and a half.

Because of the demands on my time in the summer months to not be sitting at a computer, I may write blogs as good stock opportunities arise and should be recommended. 

If you need to park money somewhere in the meantime, just park it in stock of AT&T (Symbol T). It pays a 5.47% dividend and they are merging with Direct TV who has the exclusive on the NFL Ticket TV programming. That should keep you out of trouble.

Good health and happy and safe travels to you,


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