It is well known that share prices have fallen significantly in 2022. We’ve seen some otherwise lucrative equities take a bad beating. And many of the finest housing stocks haven’t shown themselves to be immune to the sell-off. So, the stocks I’ll be breaking down shortly are vulnerable, and due to the optimistic secular tendencies of the U.S. residential market, there are nice discounts to be had.
The gloomy confidence and expectations appear to have sealed the fate of investors looking for deals in the bear market. However, that isn’t always the case for housing-related stocks, particularly the strongest. Bullish market dynamics indicate that the real estate sector will bounce back big time. Examples include the work-from-home phenomenon, millennials starting families despite the pandemic and low mortgage rates. These stocks aren’t perfect and have struggled, but they also feel like great comeback stories. It may be helpful to embrace the “buy the dip” sentiment. Either way, let’s at least give consideration where it’s due because the return on these investments could be massive.
Join me while I break down three housing stocks that have weathered the storm and are certainly due for a comeback. These reasonably priced tickers could yield huge returns:
Equity Residential (EQR)
Equity Residential (EQR) is a publicly listed REIT (real estate investment trust) that, in particular, invests in apartment properties. EQR owns or has assets in 310 properties totaling 80,407 apartment units as of December 31st, 2021, throughout San Francisco, Washington, D.C., Denver, Boston, Seattle, Atlanta, Austin, and Dallas. It is the fifth-biggest apartment owner in the United States and the fourteenth largest residential property management business. Robert H. Lurie and Sam Zell started EQR, which has its headquarters in Chicago, Illinois, in March 1993.
With home ownership out of reach for many prospective buyers and housing costs hanging around record highs, business for EQR has been excellent, with occupancy at about 97% for its 311 buildings. EQR has had mixed results regarding earnings, which is not the world’s end. Year-over-year, the growth is in crucial areas: Revenue – 9.33%, Net Income – 22.99%, EPS – 26.67%, Net Profit Margin – 12.46%. The consensus price goal for EQR from analysts providing 12-month price estimates is 85.00, with a high of 104.00 and a low of 64.00. The consensus estimate implies a 17.66% rise over its last price, and the pros tell us to buy and hold EQR. EQR currently has a dividend yield of 3.46%, with a quarterly payout of 63 cents per share.
Redfin Corp (RDFN)
Redfin Corp (RDFN) primarily offers real estate brokerage services. Real Estate Services and Properties are the two segments through which RDFN operates. Revenue transactions especially make up the Real Estate Services segment. Home purchase costs, capitalized upgrades, selling charges, and home upkeep expenditures are included in the Properties section. David Selinger, David Eraker, and Michael Dougherty founded RDFN in 2004, headquartered in Seattle, Washington. RDFN is becoming a one-stop-shop for residential real estate thanks to its use of technology, drive to establish its brand through its iBuying company, online rental platforms to increase brokerage stickiness, and expanding range of services.
With a small-cap valuation of $1 billion, RDFN‘s first-quarter sales increased by 123% to roughly $600 million year-over-year. Due to the current short-term market challenges, RDFN has issued low expectations guidance for the second quarter, but it still anticipates revenue growth of between 30% and 38%. What is left is a deeply discounted stock price that turns the stock into a great opportunity. RDFN most recently exceeded analysts’ earnings projections by considerable margins: EPS by 23.98% and revenue by 7.83%. RDFN shows year-over-year revenue growth of 122.63%. The analysts that provide 12-month price estimates have a consensus target of 12.00 for RDFN, with a high of 31.00 and a low of 8.00. The consensus forecast is a 25.52% increase over the latest price, and it comes with both buy and hold ratings. RDFN is a prime example of “buying the dip.”
Lennar Corp (LEN)
Lennar Corp (LEN) is a homebuilding company that provides housing-related financial and investment management services. Under the LEN brand, it builds and sells houses primarily for first-time, move-up, and active adult purchasers. In addition, the homebuilding division of the corporation purchases, develops and sells land to other parties. LEN’s Financial Services division provides purchasers mortgage finance, title insurance, and closing services. LEN also involves multifamily rental property development, construction, and property management. Gene Fisher and Arnold Paul Rosen formed LEN in 1954, located in Miami, Florida.
Another quarter of outstanding earnings results that outperformed forecasts recently strengthened LEN’s fundamentals, preparing the business to endure any economic headwinds. LEN stock is now designed for a growing share price. It most recently exceeded EPS forecasts by 18.63% and revenue by 3.38%. This is a nice notch on LEN’s earnings belt, as it has a solid track record in that department. LEN’s forecasts are virtually all optimistic, showing growth on both an annual and quarterly basis. LEN shows year-over-year revenue growth of 16.49%. The consensus price target among analysts providing 12-month price projections for LEN is 86.50, with a high of 112.00 and a low of 60.00. The median forecast reflects a rise of 11.76% from current pricing, and the consensus is also strong on LEN’s buy rating. LEN presently has a dividend yield of 1.94%, with a quarterly payout of 38 cents per share.
