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House building may slow down but never come to a screeching halt. In April 2020, the US Census Bureau and the US Department of Housing and Urban Development announced that over one million building permits had been issued.
You may want to invest in the construction of residential properties through homebuilder stocks today.
Overview: Homebuilder Inventories
Building a home could be the biggest investment you will make in your lifetime. Homebuilder inventories could hit new highs, with 974,000 housing starts, according to the US Census.
Homebuilder stocks plunged in April 2020 – PulteGroup (NYSE:PHM) fell 66%, Toll Brothers (NYSE:TOL) 64% and KB Home (NYSE:KBH) 60%.
However, home builders have a proven track record of coming back strong after economic crises. After the stock market crash of 2008, Lennar (NYSE: LEN) rebounded 175%, KB Home (NYSE: KBH) 111%, NVR (NYSE: NVR) 131% and DR Horton (NYSE: DHI) 90% in March 2009.
The temporary pullback in the homebuilder market may have made buying these stocks cheaper for you. But even with the recent drop in stock quotes, you won’t find many stocks under $20 in the homebuilder market. Invest in homebuilder stocks now and brace yourself for the tough road to recovery ahead.
Best Online Brokers for Homebuilder Stocks
Online brokers provide a robust set of tools to help you screen listed companies. For example, you can customize the stock screener price range to show you the best stocks under $10.
Here are some of the best online brokers to get you started.
Features To Look For In Home Builders Stock
- Earnings per share: A company’s earnings per share (EPS) is a good indicator of its profitability. You can calculate a company’s EPS by dividing its net income by its total number of shares outstanding. Keep track of EPS reports to assess whether the company is overestimating or underperforming in the market.
- P/E ratio: The price-to-earnings (P/E) ratio can help you determine whether a stock is undervalued or overvalued. The lower the P/E ratio, the better the stock as an investment. Since most homebuilder stocks are expensive to buy, their P/E ratios won’t be as low as penny stocks under $5.
- Annual revenue : The total income generated by homebuilder stocks can be essential for making investments. Compare revenue histories to examine a company’s growth over the years before investing.
Cement your financial growth
The wide variety of home financing options available in the market has made it possible for anyone to build a dream home. Investing in home builder stocks can strengthen your portfolio as long as you do research to make sure it fits well in your portfolio.