D R Horton Inc (NYSE: DHI) remains a “buy” even though its shares have already gained nearly 50% since mid-June, says Stephanie Link. She’s the Chief Investment Strategist at Hightower.
Link’s bull case for the D R Horton stock
Last month, the U.S. Census Bureau said new home sales were up 7.5% despite mortgage rates at record levels in October. Experts had forecast a 3.0% year-on-year decline instead.
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But Link also has a list of other reasons to be bullish on the D R Horton stock. Explaining why she recently took a position in it, Link said:
It’s really a function of the 30-year being down 21% from its high. And D R Horton is the best-in-class operator in terms of margins and in terms of return on equity (ROE).
At nine times earnings, Link sees the homebuilder stock as still attractive in terms of valuation as well.
U.S. has a significant shortage of houses
On CNBC’s “Squawk Box”, she also noted that the Arlington-headquartered company is particularly a great long-term pick to play the U.S. housing shortage.
You’ve had thirteen years of under production in the industry. I know supplies are on the way higher but I do think that you can see an extended cycle.
There’s currently an estimated shortage of 3.8 million houses in the United States. Nonetheless, D R Horton reported its financial results for the fourth quarter last month that were below the Street estimates.
Other than “DHI”, Stephanie Link also recommends investing in stocks like IBM and Johnson & Johnson.
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