Whether it’s a mansion, a tiny house, a condo in a bustling metropolis or a cabin in the woods, everyone has a dream home.
When we’re ready to pull the trigger and buy a home, we start shopping with that image in mind.
But in a lot of cases, that dream house just isn’t out there — leaving potential homebuyers to either settle for something or continue to wait.
What once seemed too expensive for the average American has become within reach … thanks to incredibly low interest rates.
That’s translated to a boom in new-home construction.
As you’ll see, more Americans are choosing to build their dream home.
Using Money & Markets Chief Investment Strategist Adam O’Dell’s stock rating system, we’ve found a company that is capitalizing on that boom … and one investors like you and me can earn big profits from.
Double-Digit Jump in New Home Construction Coming
While interest rates remain at their lowest in history — around 3% — what’s putting pressure on the housing market is the lack of existing homes for sale.
According to Kiplinger, the number of existing homes for sale decreased for the 12th straight month in June.
That means, rather than finding an existing home (where there aren’t many), homebuyers are building new.
Home Construction Value to Jump 11% in 3 Years
And the numbers already show an uptick in home construction.
In June, new home construction jumped 17.3%, following double-digit declines in March and April.
There was a 2% increase in the number of home building permits issued — meaning more construction is on the way.
Now is a great time for folks to build their dream home. And we’ve found a company that does it … and does it well … leading to strong profits for investors who get in on the rise in homebuilding now.
This Homebuilding Company Will Continue to Rise
We used Adam’s stock rating system to seek out the best homebuilding company to capitalize on these housing trends.
PulteGroup Inc. (NYSE: PHM) develops land, primarily for residential housing. The company specializes in constructing single-family homes, townhouses, condos and duplexes.
PulteGroup (Red Line) Outpaces the Homebuilding Industry
In its second-quarter earnings report, the company said its home sale revenues increased 3% … despite coronavirus lockdowns.
Low interest rates and a restricted supply of existing homes gives companies such as PulteGroup a massive boost in sales.
The company rates a 96 out of 100, with its strongest single-factor ratings on quality, growth and value.
When we dive deeper into PulteGroup, here’s what we find:
- Quality — PulteGroup earns a 98 rating on quality — meaning only 2% of all other stocks are higher. It has strong operating cash flow (93 out of 100) and equally strong returns on investment, equity and assets (92 out of 100).
- Growth — The company rates a 97 on overall growth — that means it’s better than 97% of all other stocks. PulteGroup’s one-year earnings per share growth rate is 29%, and its sales over the last 12 months were $10.6 billion.
- Value — In terms of overall value, PulteGroup rates a 96 out of 100 on Adam’s system. It beats or equals the rest of the homebuilding industry in price to earnings, price to sales and price to cash flow — all are better than at least 85% of the rest of the market.
Your Next Steps
The Federal Reserve has made clear that it won’t touch interest rates anytime soon.
That bodes well for people in the market to buy or build a new home.
PulteGroup fills the void of lower existing-home supply by building new … and building affordably.
Those low interest rates coupled with the demand for new homes will set the company on the path for strong, double-digit gains in the future.
PulteGroup is the right way for investors to realize big profits in the home construction industry.
Pro tip: Recently, Adam recommended a stock for bullish exposure to homebuilders to his Cycle 9 Alert readers. To find out more about Cycle 9 Alert, click here.