Housing Sector Snapshot (Part 1)

Which Stocks Are Set to Go “Through the Roof”

This morning brought refreshing news from The Standard & Poor’s/Case-Schiller home-price index: U.S. home prices are now 9.3% higher than they were this time last year. To put it into perspective, that’s the largest year-on-year gain since 2006.

This good news follows on the coattails of a series of encouraging housing reports from last week:

  • New home sales are up 18.5% from March 2012.
  • Existing home sales are 10.3% higher than a year ago.
  • The average price of a new home has risen 3% to $247,000.
  • The average price of an existing home has jumped 11.8% to $184,300.

These reports paint a picture where rock-bottom mortgage rates and the shrinking supply of homes for sale are aiding the housing recovery. All-in-all, this is great news for homebuilders, home sellers and also the market as a whole. This quarter, analysts expect…

  • The average home builder to see 179% earnings growth.
  • The average construction equipment company to post 77% earnings growth.
  • The average REIT to post 34% earnings growth.
  • The average home improvement store to grow earnings by 21%.

And this is fantastic news for investors that are quick to the take. Last fall, I saw the recovering residential construction market as a lucrative opportunity, so I added no fewer than 11 housing plays to my Emerging Growth newsletter. How have we done so far? Well, we’ve held each of these stocks for an average of seven months and have seen an average return on over 26%.

But I believe there is plenty of opportunity left for investors who still have yet to buy in. Many of the biggest players have yet to announce earnings. So without further ado, here are my top Portfolio Grader picks to profit from the housing recovery.


Louis Navellier

Louis Navellier

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