Investors – A Fresh Look at the Home Building Sector

The world is just a complete mess. Europe is teetering on the brink of deflation and is forced to initiate a QE program. Russia and Ukraine are battling it out for supremacy. ISIS terrorists are roaming the world for conquests. Japan is in a recession. China’s economy is slowing down. The only beacon of light is the United States. By all accounts our economy is in great shape. The latest jobs report was a smash hit. We added 257,000 new jobs in January. November and December jobs were revised upward to 414,000 in November and 329,000 in December. This is the 11th straight month of jobs numbers above 200,000. For the past three months we’ve added an average of 336,000 jobs. Weekly wages have risen 12 cents per hour. Consumer confidence is the highest in a decade. Car sales were up 14% in January. With all this good news what we’ve seen in January is a choppy market reacting to the highs and lows of international events and the sharp drop in oil prices. However, tucked in the jobs report is an interesting set of statistics. It has to do with the housing sector.

Low interest rates are stoking a recovery in this beaten down sector. What we have are strong jobs numbers here. Residential Construction Workers added 12,500 jobs. This is the biggest increase since 2002. Building Materials added 3,700 jobs. Wood Products Manufacturing added 4,100 new jobs. Specialty Trade Contractors added 7,600 jobs. Even Real Estate added 4,400 jobs.

We are looking at two sectors in this group: Building Residential-Commercial and Building Products Retail-Wholesale. These are the top five companies in each group by Weighted Alpha.
Building-Residential-Commercial
Lennar Corp (LEN) Recent Price $48.02 52 Week High/Low is $48.52/$35.74 EPS is $2.81 PE ratio is 16.53 Dividend is $.16 (.34%) Market Cap is $9.85 B
DR Horton (DHI) Recent Price $26.49 52 Week High/Low is $26.89/$19.19 EPS is $1.54 PE ratio is 16.74 Dividend is $.25 (.97%) Market Cap is $9.68 B
Pultegroup (PHM) Recent Price $22.26 52 Week High/Low is $23.28/$16.56 EPS is $1.24 PE ratio is 17.32 Dividend is $.32 (1.49%) Market Cap is $8.25 B
NVR Inc (NVR) Recent Price $1,315.11 52 Week High/Low is $1,355.09/$1,027 EPS is $64.27 PE ratio is 20.06 Market Cap is $4.05 B
Ryland Group (RYL) Recent Price $43.34 52 Week High/Low is $46.67/$30.33 EPS is $3.10 PE ratio is 13.74 Dividend is $.12 (.28%) Market Cap is $2.00 B
Toll Brothers (TOL) Recent Price $36.40 52 Week High/Low is $39.95/$28.92 EPS is $1.80 PE ratio is 20.04 Market Cap is $6.B
Building Products-Retail-Wholesale
Lowes Companies (LOW) Recent Price $71.90 52 Week High/Low is $72.25/$44.13 EPS is $2.52 PE ratio is 28.36 Dividend is $.92 (1.29%) Market Cap is $70.97 B
Home Depot (HD) Recent Price $109.04 52 Week High/Low is $109.74/$74.61 EPS is $4.40 PE ratio is 24.77 Dividend is $1.99 (1.72%) Market Cap $143.70 B
Jewett Cameron Trading Company (JCTCF) Recent Price $10.88 52 Week High/Low is $11.68/$9.09 EPS is .65 Market Cap is $28.18 M
Tecnoglass Inc. (TGLS) Recent Price $10.10 52 Week High/Low is $15.00/$9.40 EPS is $.51 PE ratio is 0 Market Cap is $246.44 M
Fastenal Company (FAST) Recent Price $42.33 52 Week High/Low is $52.21/$40.18 EPS is $1.67 PE ratio is 25.19 Dividend is $1.12(2.66%) Market Cap is $12.55 B

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