Rally in Homebuilder Stocks Not Over - Goldman
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Homebuilder stocks have significantly outperformed the S&P 500 Index this year. XHB SPDR S&P Homebuilders ETF (NYSE: XHB) is higher by 22 percent year-to-date and iShares Dow Jones US Home Construction (NYSE: ITB) is higher by 37 percent. After such a huge run-up, many investors in this sector are taking profit, while others are avoiding the sector due to the relatively high valuations. This could be a mistake, according to analyst at Goldman Sachs. They acknowledged the year-to-date performance, but they think we are just at the beginning of the recovery. As a result, they upgraded the sector to Attractive from Neutral.
Overall housing has a long list of positives, noted today's report by analysts Joshua Pollard and Anto Savarirajan. These positives include renewed home price appreciation. Additionally, the analysts think recent job growth supports 200,000 more new home sales without further job adds. Shadow supply has declined, and housing policy has been supportive since August 2011 and should remain so.
Goldman analysts have a Buy rating on the following homebuilders. M.D.C. Holdings, Inc (NYSE: MDC) Conviction Buy, KB Home (NYSE: KBH) PulteGroup, Inc (NYSE: PHM) and Toll Brothers Inc (NYSE: TOL). Goldman has a Sell rating on NVR, Inc (NYSE: NVR).
Estimates and price targets were raised across the group, and pullbacks in Buy-rated stock may be good buying opportunities.
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Overall housing has a long list of positives, noted today's report by analysts Joshua Pollard and Anto Savarirajan. These positives include renewed home price appreciation. Additionally, the analysts think recent job growth supports 200,000 more new home sales without further job adds. Shadow supply has declined, and housing policy has been supportive since August 2011 and should remain so.
Goldman analysts have a Buy rating on the following homebuilders. M.D.C. Holdings, Inc (NYSE: MDC) Conviction Buy, KB Home (NYSE: KBH) PulteGroup, Inc (NYSE: PHM) and Toll Brothers Inc (NYSE: TOL). Goldman has a Sell rating on NVR, Inc (NYSE: NVR).
Estimates and price targets were raised across the group, and pullbacks in Buy-rated stock may be good buying opportunities.
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